Hampshire County Council v Supportways Community Services Ltd [2006] EWCA Civ 1035

[2006] EWCA Civ 1035Case No C1/2005/2867
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION, ADMINISTRATIVE COURT
The Honourable Mr Justice Mitting
CO/1505/2005
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 18/07/2006
Before
LORD JUSTICE MUMMERYLORD JUSTICE NEUBERGERLORD JUSTICE WILSON
Between
HAMPSHIRE COUNTY COUNCILAppellantSUPPORTWAYS COMMUNITY SERVICES LTDRespondent
Mr Timothy Straker QC and Ms Gillian Carrington (instructed by Hampshire County Council Legal Services) for AppellantMr Stephen Knafler (instructed by Messrs Sternberg Reed Taylor & Gill) for RespondentHearing Hearing date : 8th June 2006
Judgment
[1]This is an appeal brought by Hampshire County Council (“the Council”) against a decision of Mitting J, ordering it to conduct a review of the services provided by the respondent, Supportways Community Services Ltd (“the Company”) purportedly pursuant to a contract between them which took effect on 1st April 2003 (“the Agreement”). All references hereafter to clauses are to clauses of that contract.

The relevant background and facts

[2]The Supporting People Scheme (“the Scheme”) is the successor to the Transitional Housing Benefit Scheme, and it came into force on 1st April 2003. In very general terms, the purpose of the Scheme was to transfer the primary responsibility for the provision of many support, or welfare, services from central government to local government. The Scheme broadly works as follows. A local authority (such as the Council) enters into a contract (such as the Agreement) with a service provider (such as the Company) for the provision of housing related support services to specified individuals, on the basis that the service provider is paid by the local authority, which is in turn put in funds for this purpose by means of a grant accorded by central government.[3]Section 93(1) of the Local Government Act 2000 (“the 2000 Act”) provides that the Secretary of State (at all relevant times, for present purposes, the Deputy Prime Minister) may pay grants to local authorities towards the expenditure which they incur in contributing towards the provision of welfare services. Section 93(3) to (7) deals, in broad terms, with the amount of, the conditions of, and information to be supplied in connection with, such grants. Sub-section (8) of section 93 of the 2000 Act (“section 93”) requires local authorities to “have regard to any guidance” issued by the Secretary of State in connection with “the administration and application” of such grants. Sub-section (9) requires local authorities to “comply with any directions” given by the Secretary of State in the same connection.[4]As foreshadowed by section 93(8), guidance was given in a document entitled “Supporting People Grants (England) Guidance 2003”, which only applies to the Council to a limited extent because it is an “Excellent Authority”. Paragraph 71 of this Guidance (“the 2003 Guidance”), which applies to Excellent Authorities, provides that a local authority should carry out periodic “service reviews” which are to be “rigorous and disciplined” and should “take into account the nature, level, cost and quality of services”. Despite indications to the contrary, there is no other stipulation in the 2003 Guidance as to the manner or content of the stipulated service reviews. As the Judge said, it appears that paragraph 71 of the 2003 Guidance is “entirely circular”, and that a local authority “can set its own rules and change them as it sees fit”. However, as he went on to hold, the effect of this is that the 2003 Guidance provides that a local authority should adhere to the rules which it sets.[5]The Council duly published its rules in two documents, issued in June 2003 and in December 2003 (“the published rules”). The contents of the published rules need not be explained, in the light of a contingent concession made by Mr Timothy Straker QC (who appears with Ms Gillian Carrington for the Council) and the view we have formed on his primary ground of appeal. However, it should be mentioned that, although the latter document made some alterations to the rules in the former document, it did not remove the provision it contained for what the Judge called a “review of the review” by the Council.[6]The Company was established in 2001 to provide housing-related support services, and it duly provided such services to a number of people in return for payment from central government. In anticipation of the introduction of the Scheme, it applied to the Council for a contract to support 27 so-called “users”, being people to whom it was presumably already providing services at the time under the Transitional Housing Benefits Scheme. In due course, such a contract, namely the Agreement, was entered into. It was in a form which, we were told, was promulgated by the Office of the Deputy Prime Minister. It was entitled “Full Interim Contract for Supporting People Services [Plain English Version]”. It is necessary to set out some of its terms.[7]After identifying the parties (the Council being referred to as “us” and the Company as “you”), the Agreement briefly set out the “Background” in these terms:
“A. From 1 April 2003 changes will be made to funding for the provision of housing related support services… B. So as to minimise the disruption to the support services which you are currently providing, it has been agreed that we will enter into this Agreement with you under which you will continue to provide support services… C. …[T]his Agreement is therefore an interim arrangement and that as set out in the Agreement, we will carry out a review of the way in which you provide support services. D. Depending on the outcome of that review, we may or may not ask you to provide the support services. If we do, and you agree, we will enter into a new agreement. If we don’t…then this Agreement will terminate, as set out below.”
[8]Clause 1 contained a number of definitions. They included “Expiry Date”, which was the anniversary after the completion of a “Support Services Review”, which was itself defined as a review of the Support Services carried out pursuant to clause 11. The “Support Services” were defined as the services listed in Schedule 1, which set out the services which the Company was to provided to the 27 users. The contractual annual price payable for these services was £337,532.52 (although the Agreement appears to record a different figure). There was also a definition of “Support Services Review Date”, but it does not need to be set out.[9]Clause 2 can be summarised, at least for present purposes as providing that the Agreement would start on 1 April 2003 and would end on the Expiry Date as defined.[10]Clause 11 was in these terms: “11.1 We will begin a Support Services Review of each of the Support Services during the three month period starting on the relevant Support Services Review Date concerned… 11.2 …. 11.3 Each Support Services Review must be carried out in accordance with any guidelines and directions issued by the Deputy Prime Minister under section 93...”.[11]Finally, I should refer to clause 38, which was to apply when the Agreement ended. Clause38.1 required the Company to hand over to the Council all documents supplied by the Council “for the purposes of this Agreement” or “produced or augmented by [the Company] in connection with the carrying out of [its] obligations under this Agreement”. Clause38.2 forbade the Company from retaining copies of any such documents unless authorised by the Council or required by law.[12]After the Agreement had been in operation for nine months, the Council initiated a review, purportedly in accordance with clause 11.1, on 1st January 2004 (“the 2004 review”). During the course of that review, officers of the Council came to the conclusion that the cost of the services provided by the Company under the Agreement was much too high. This was put to, and rejected by, the directors of the Company. Before some further submissions were received from the Company, the 2004 review was concluded on 17th July 2004, on the basis that the officers “considered that there was sufficient evidence” to justify their conclusion that the Company was charging substantially too much for the services it was providing. The Council offered (on two occasions) to enter into a new contract with the Company at a substantially lower price than that stipulated in the Agreement, an offer which the Company rejected.[13]It was accordingly the Council’s view that the Agreement determined, pursuant to clause 2, on 17th July 2005, and that, primarily because of what the Council regarded as the Company’s unreasonably high costs, the Agreement would not be renewed. This view was challenged by the Company, who brought the instant proceedings primarily on the ground that the 2004 review was not carried out properly, and that, if it had been, it would have resulted in an offer of a new contract to the Company on similar financial terms to those contained in the Agreement. At least for a period, while these proceedings were under way, it appears that the Company continued to provide the services to the 27 users, although it appears that there is a dispute as to the amount that it is entitled to be paid by the Council for so doing.

The course of these proceedings

[14]These proceedings were brought in the Administrative Court on the basis that the Company was primarily seeking public law remedies. At the hearing before Mitting J on 7th and 8th December 2005, the Company was given permission to amend its claim. As a result, it was seeking, by way of judicial review, an order quashing the result of the 2004 review, an order requiring the Council to initiate a further review, and an order that the Council “treat [the Agreement] as continuing upon its terms until trial”, and (not by way of judicial review, and, by implication, as private law claims) a declaration that the Council had yet to conduct a review pursuant to Clause 11 of the Agreement, and an order for specific performance that it do so.[15]As the argument proceeded before the Judge, there was discussion about whether the Company should be seeking public law remedies or private law remedies, as well as what rights, if any, the Company had, and how any such rights could be satisfied.[16]In his judgment on 8th December 2005, the Judge reached the following conclusions. First, he decided that the 2004 review did not comply with clause 11.3, because it did not follow the published rules, and hence, in the light of the effect of paragraph 71 of the 2003 Guidance, the 2004 review was not “carried out in accordance with any guidelines and directions issued….under section 93…”. Secondly, he decided that, because the review was carried out by the Council in good faith and could properly be characterised as a review, it was effective to determine the Agreement under clause 2, notwithstanding its failure to comply with clause 11.3. He reached this conclusion in the light of the need for certainty, bearing in mind the facts that the effect of the review was to trigger a contractual termination provision, and that the whole Agreement rested on the availability of funds from central government which could be withdrawn at any time.[17]Thirdly, he decided that, notwithstanding his conclusion that the review which had been carried out by the Council was effective to determine the Agreement on 17th July 2005, the Company still “had a contractual right to have an unflawed review carried out; see clause 11.3”. He went on to say that, were such an unflawed review to be carried out, it might result in the offer of a new contract to the Company on more favourable financial terms than those which had been offered in 2004. Fourthly, he considered the question of the appropriate relief to accord the Company. As damages for this breach of contract were agreed not to be an adequate remedy, the Judge decided that he should award specific performance, namely an order that the Council conduct a further review under clause 11, this time complying strictly with the terms of clause 11.3. He also said that it was unnecessary to decide whether the relief was available by way of public law remedies as “[t]he private and public law remedies are effectively the same”.[18]He adjourned the question of the form of the order to a later hearing which took place on 20th December. At that hearing, he gave the Company permission to re-amend its claim, which was done the following day, although nothing, I think, turns on the terms of the re-amendments, at least for present purposes. At this second hearing, the Judge decided, among other matters, that the fresh review to be carried out by the Council was to be based on the factual position as it was in July 2004, and that the order would contain no obligation on the Council to offer a fresh contract to the Company, as no such obligation existed in the Agreement.[19]Although the Council promptly applied for permission to appeal against this decision, it carried out a further review as ordered by the Judge. This further review came to much the same conclusion as the 2004 review. Its validity was again challenged by the Company, which issued fresh judicial review proceedings with a view to quashing it. Those proceedings have been adjourned pending the outcome of this appeal.[20]The Council appealed against the Judge’s conclusions that the 2004 review did not comply with clause 11.3 (i.e. his first conclusion), and moreover contended that, if the Judge was right on that issue, he could not, or ought not, have granted the relief that he did (i.e. his third and fourth conclusions). Richards LJ granted permission to appeal on paper on the latter aspect but not on the former aspect, and directed that, if the Council wished to renew its application in relation to the Judge’s first conclusion, it should do so at the hearing of the appeal on the issues for which he had granted permission. In his skeleton argument in anticipation of the hearing of the appeal, Mr Straker made it clear that the Council wished to avail itself of that opportunity. The Company did not cross-appeal, but towards the very end of his submissions at the hearing of the Council’s appeal, Mr Stephen Knafler, who appeared for the Company, applied for the first time for permission to appeal out of time against the Judge’s second conclusion, namely that the Agreement had determined pursuant to clause 2, notwithstanding the fact that the 2004 review had not complied with clause 11.3.[21]So far as the Council’s renewed application for permission to appeal against the first conclusion is concerned, Mr Straker indicated that it would not be pursued if we allowed its appeal on the Judge’s third and fourth conclusions. As we proposed to take that course, we did not call on him to pursue his renewed application for permission to appeal against the first conclusion. As to the Company’s application to appeal against the Judge’s second conclusion, we refused it at the hearing because it was made far too late. We were told that counsel was only instructed on the appeal rather late, but the Company’s skeleton argument, settled by counsel, was served nearly two weeks before the hearing, and it does not even hint at the possibility of a cross-appeal. (It is only fair to add that the circumstances in which counsel was instructed mean that no criticism of him is thereby to be inferred).[22]In those circumstances, I turn to consider the third and fourth conclusions reached by the Judge on the basis that he was right in his first and second conclusions. In other words, having decided that the 2004 review breached clause 11.3, but was nonetheless effective to determine the Agreement by virtue of clause 2, the question is whether the Judge was right to decide that the Company was entitled to a further review which satisfied clause 11.3, and to order the Council to carry out such a review. Given that the Judge decided that the Company was entitled to this relief both in private law (in contract under the Agreement) and in public law (by judicial review), it is right to consider those two aspects separately.

Was the Company contractually entitled to a fresh review under clause 11?

[23]Was the Judge right to conclude that the Company was entitled to require the Council to conduct a fresh review under clause 11, and in particular a review which complied with clause 11.3? In my view, the Judge was wrong to make the order that he did, at least in private law, because the Company simply had no right under the Agreement (or on any other basis) to such a further review. This conclusion can be justified in a number of ways, some of which may amount to much the same point.[24]First, the Agreement has, as a result of the Judge’s second conclusion, determined, and it therefore seems a little difficult to discern a basis upon which an obligation under it can be required to be performed. Mr Knafler rightly said that there are contractual obligations which can survive the determination of the contract. However, as Wilson LJ pointed out during argument, it is hard to see how a right to enforce a step, which is the contractual mechanism for determining the contract, can survive the determination of that contract.[25]Secondly, the effect of the Judge’s second conclusion must be that the 2004 review was a “Support Services Review” for the purposes of the Agreement, as otherwise the 17th July 2005 could not have been the “Expiry Date” thereunder, and the provisions of clause 2 with regard to determination would not have come into play. The Company had a right to such a review under clause 11.1, but it was plainly a right to a single review. (It is true that the Agreement envisaged the possibility of a number of reviews, but only one in respect of each of the services provided by the Company; the review conducted by the Council was in respect of all such services). Accordingly, the right to a review was exhausted by the actual review carried out in 2004, and there was no contractual basis for granting a further review.[26]Thirdly, the provisions of clause 11.3 did not in any event give the Company a freestanding right to a review in accordance with its terms. They merely stipulated that a review under clause 11.1 was to be carried out in a certain way. If, as happened here (in the light of the Judge’s second conclusion), the 2004 review qualified as a review under clause 11.1 even though clause 11.3 was not complied with (according to the Judge’s first conclusion), the provisions of clause 11.3 could not be sensibly interpreted as giving rise to a right to a fresh review.[27]Fourthly, it appears to me that the Judge’s decision on this issue is not easy to reconcile with his reasons for concluding that, even though it did not comply with clause 11.3, the 2004 review put an end to the Agreement. The reasons for that conclusion were essentially based on the need for the parties to know where they stood. If it is possible for the Company to seek a fresh review under clause 11.1 after the Agreement has come to an end, it would, at least if that fresh review was to have any point, leave the parties in a state of uncertainty despite the determination of the Agreement. The purpose of the fresh review, as the Judge said, was to give rise to the possibility of the Council offering a fresh contract to the Company. So long as that remained a possibility, the Council would not have been able to enter into any sort of long-term (or even medium-term) support agreement with another provider in relation to the 27 users, and the Company would not have known what its position with regard to those users would be.[28]Mr Knafler sought to meet this argument by pointing out that the Council and the Company had apparently no difficulty in this connection: as mentioned above, they continued with the arrangements under the Agreement on an informal basis. That argument will not do, in my judgment. The parties were plainly not obliged to continue their relationship on this informal, or any, basis, while the Company’s claims were being litigated. Further, it cannot be right to rely on this factor, as it would be an equally good answer to the Judge’s reasons for concluding that a clause 11.1 review must be effective to determine the Agreement even though it did not comply with clause 11.3.[29]Further, the provisions of clause 38 of the Agreement are hard to reconcile with the notion that the parties would have envisaged their arrangements continuing on an ad hoc basis after the Agreement had concluded. If, as it provided, the Company had to hand over all the documents relating to its functions, without keeping copies, once the Agreement determines, it is hard to think that the parties would have envisaged the arrangements continuing on any basis after such determination. If the parties did not envisage this, it cannot be right to construe the Agreement on the assumption that they did so.[30]For all these reasons, I consider that there was no basis upon which the court could properly have ordered a further review under clause 11, at least as a private law remedy. Unsatisfactory though it may be, the Company was limited to a claim for damages. This may not be as unfair as it seems, in that at least part of the difficulty in assessing the damages would no doubt be based on the fact that there would have been no obligation on the Council to offer a new contract to the Company. That factor would also render the order the Judge made of limited value, because, as he recognised, whatever the outcome of the fresh review he ordered, there would be no obligation on the Council to offer a new contract to the Company.[31]Mr Knafler had a quite separate contention, namely that the Council had conceded below that it was open to the Judge to order specific performance, a contention advanced on two bases. The first basis was said to be that Mr Straker had expressly accepted, during argument, that the court could make the order which the Judge made. It is fair to say that, towards the end of his submissions before the judgment below, Mr Straker did not strenuously resist Mitting J’s expression of opinion that he could order a fresh review under clause 11 notwithstanding the fact that the Agreement had determined. However, to extract from an exchange between a defendant’s counsel and the judge a positive concession that the claimant is entitled to relief, particularly in a case such as this, where all the previous oral and written material clearly indicate that the defendant is resisting the grant of any relief, requires very clear words indeed. No such words can, in my firm view, be found in what was said to the Judge below here.[32]The second basis for Mr Knafler’s contention that there had been a concession rested on the fact that, when the terms of the order below were discussed after judgment, Ms Carrington, for the Council, submitted that the order should be one directing specific performance of clause 11. There is, in my view, nothing in this point either. Ms Carrington’s submission was based on the fact that the Judge had decided that a further review should be ordered, and the question being debated was whether the relief should be in private law (as Ms Carrington was arguing) or in public law (as Mr Knafler was contending). If there was any concession at all in this connection (and I do not think there was), it was that, if the Company had any right to relief, it was in private law, not public law.[33]In these circumstances, it is unnecessary to consider two further arguments raised by the Council, although it is appropriate to record what they were. Mr Straker contended that, as the published rules provided for a “review of the review”, as the Judge conveniently put it, and such a review of the 2004 review was carried out by the Council, the Judge should not have made the order that he did in any event, unless the review of the 2004 review could be shown to be defective, and no argument to that effect was advanced by the Company. Secondly, he said that the carrying out of a review under clause 11 was not the sort of activity which was properly the subject of an order for specific performance, on the basis that it would require constant supervision.

Can the Company seek a public law remedy?

[34]In the light of this conclusion, it is necessary to consider whether the Company can justify by reference to public law principles the relief the Judge granted. The primary question in this context is whether the Company should have been seeking only a private law remedy (as the Council contended), whether its remedy lay both in public and in private law (as the Company contended, albeit that it put its case primarily in public law), or whether it does not matter how its remedy is characterised (as the Judge held).[35]In my judgment, the basis of the Company’s case was not in public law, but only in private law. The Company’s complaint was that the Council had failed to comply with the Agreement, and the Company accordingly was seeking to enforce the Council’s compliance. Subject to being contradicted by a closer analysis of the principles or by binding authority, such a complaint and such enforcement would appear to me respectively to involve a private law claim and a private law remedy, both of which are contractually based, albeit with common law and equitable aspects.[36]In answer to this, Mr Knafler first relied on the fact that the Council’s obligations under clause 11.3 were, in reality, public law duties in that they can be traced directly to section 93 and to paragraph 71 of the 2003 Guidance. The fact that a contractual obligation is framed by reference to a statutory duty does not, in my view, render that obligation a public law duty. Of course, where the statutory duty is owed to a contracting party independently of the contractual obligation, he can normally expect to be able to seek a public law remedy by reference to the duty, as well as, or instead of, a private law remedy by reference to the obligation. However in the present case, the Council’s public law duty, namely that arising under section 93, was owed to the Secretary of State in relation to the provision of grants. There was, as it seems to me, no question of that duty being owed to providers such as the Company.[37]Mr Knafler next relied on the fact that the nature of the Agreement, involving as it did the Council performing public administrative functions, was such that a claim brought under it would be a public law claim. That cannot, I think, be right. Virtually any contract entered into by a local authority, almost by definition, will involve it acting in such a way, as otherwise it would be acting ultra vires. Yet, it is clear that, as Mr Knafler rightly accepts, in the case of alleged breaches of many such contracts, a private law claim is the only type of claim which can be brought.[38]Thus, the mere fact that the party alleged to be in breach of contract is a public body plainly cannot, on its own, transform what would otherwise be a private law claim into a public law claim. There are, of course, circumstances where, in a contractual context, a public body is susceptible to public law remedies. However, where the claim is fundamentally contractual in nature, and involves no allegation of fraud or improper motive or the like against the public body, it would, at least in the absence of very unusual circumstances, be right, as a matter of principle, to limit a claimant to private law remedies.[39]Mr Knafler referred to a passage in the sixth (1999) edition of de Smith, Woolf and Jowell’s Principles of Judicial Review, at paragraph 3-019, which includes the following three sentences:
“If a public function is being performed, and contract law does not provide an aggrieved person with an appropriate remedy, then action taken under or in pursuance of a contract should be subject to control by judicial review principles. Where a public body enters into a contract with a supplier, a dispute about the rights and duties arising out of the contract will often be determined by private law. However, the decision of a public body to enter, or not [to] enter, into a contract may be subject to judicial review.”
[40]The point made in the third sentence of that passage (which is expanded in paragraph 5-035 of the book) has no application here. It is true that the result of the review of which the Company complains did result in the determination of the Agreement and in the offer of a new contract whose terms it considered objectionable. This does not mean, however, that its claim is within the scope of the third sentence in that passage. Its claim is that the 2004 review was not carried out in accordance with the Agreement, not, for instance, that the Council acted in bad faith or was guilty of an improper motive in carrying out, or in failing to carry out, the 2004 review in accordance with clause 11.3. The Company’s complaints that the Agreement was not properly determined, and that it was not offered a new contract on appropriate terms, are solely based on the contention that the Council failed to comply with its (purely contractual) obligation to carry out the 2004 review in accordance with clause 11.3.[41]Mr Knafler relied on the first sentence in the passage I have quoted from de Smith, on the basis that, if private law could not provide a satisfactory remedy in the present case, then the Company should be entitled to resort to public law remedies. As discussed above, it does indeed appear that the Company is only entitled, in terms of private law remedies, to damages for breach of clause 11.3, and it seems likely that such damages would be very difficult to assess. Indeed, it is quite possible that they would only be nominal, as the only consequence of the breach of clause 11.3 was its reflection in the terms of the new contract offered to the Company, and, as the Judge pointed out when considering the terms of the order, the Council had no obligation to enter into a new contract with the Company.[42]However, it cannot be right that a claimant suing a public body for breach of contract, who is dissatisfied with the remedy afforded him by private law, should be able to invoke public law simply because of his dissatisfaction, understandable though it may be. If he could do so, it would place a party who contracts with a public body in an unjustifiably more privileged position than a party who contracts with anyone else, and a public body in an unjustifiably less favourable position than any other contracting party.[43]Equally importantly, it appears to me that it would be wrong in principle for a person who would otherwise be limited to a private law claim should be entitled to base his claim in public law merely because private law does not afford him a sufficiently attractive remedy. It is one thing to say that, because a contracting party is a public body, its actions are, in principle, susceptible to judicial review. It is quite another to say that, because a contracting party is a public body, the types of relief which may be available against it under a contract should include public law remedies, even where the basis of the claim is purely contractual in nature.[44]Mr Knafler relied on a number of cases relating to the circumstances in which, when making a claim in relation to a contract with a public body, the other contracting party can make a claim in public law. Two of those cases appear to me to be of some relevance to the present dispute, and, indeed, to support the conclusion that the Company cannot rely on public law in this case.[45]In Mercury Energy Ltd –v- Electricity Corporation of New Zealand Ltd [1994] 1 WLR 521, Lord Templeman, giving the judgment of the Privy Council, said this at 529B:
“It does not seem to me likely that a decision by a state enterprise to enter into or determine a commercial contract to supply goods or services will ever be the subject of judicial review in the absence of fraud, corruption or bad faith.”
That statement is plainly unhelpful to the Company’s case: the only basis on which its claim is founded is breach of contract. Later, at 529G, Lord Templeman made the following observation, which also seems to apply to the present case:
“The causes of action based on breach of statutory duty, abuse of monopoly position and administrative impropriety are only relevant if the causes of action based on contract are rejected. If the causes of action based on contract are rejected, the other causes of action will only constitute attempts to obtain, by the declaration sought, specific performance of a non-existing contract. The exploitation and extension of remedies such as judicial review beyond their proper sphere should not be encouraged.”
[46]In Mercury Communications Ltd –v- Director-General of Telecommunications [1996] 1 WLR 48, Lord Slynn of Hadley, (who gave the only reasoned speech) referred in a passage at 57E-G to the importance of maintaining a degree of “flexibility as to the use of different procedures”, namely public law and private law procedures. That case was concerned with the question of procedure than with that of remedy. Lord Slynn explained in the same passage that the plaintiff had properly brought private law proceedings because the dispute was “in substance and in form …as to the effect of the terms of the contract even if it can also be expressed as a dispute as to the terms of the licence”. In the present case, the issues which we are considering concern the meaning and effect of the Agreement.[47]In these circumstances, I conclude that the Company has no claim which it can pursue by way of judicial review, and in particular by seeking public law remedies. Since preparing this judgment, I have had the opportunity of reading the judgment of Mummery LJ which deals with this aspect of the appeal on a somewhat broader basis, and with which I agree.

Conclusion

[48]For these reasons, it follows that I am of the view that the Council’s appeal must be allowed. It may well be that, subject to argument to the contrary, the order we make should direct an inquiry as to damages. Finally, it is only fair to the Judge to record that the arguments as developed before us, were, in terms of content and emphasis, rather different from those which, as we have seen from the transcript of the hearing below, were raised before him.[49]I agree with both judgments.[50]I agree with Neuberger LJ that this appeal should be allowed for the reasons given by him.[51]The arguments addressed to the court are relevant to a more general question, namely the extent to which the contracting out of service delivery by local authorities is amenable to judicial review. Although the practice of contracting out by public authorities has increased in recent years, there is comparatively little case law on the topic. There are, however, helpful discussions of the principles in Professor Paul Craig’s Administrative Law (5th Ed) pp 811-812, English Public Law (edited by Professor David Feldman 2004) at paragraph 17-76 and an article by Sue Arrowsmith in 106 LQR (1990) 277.[52]Questions of amenability to judicial review could arise in a range of situations which it would not be appropriate to discuss in detail in this case. I mention in passing the possibility of a public law challenge to procedures followed by the local authority in deciding to whom and on what terms service delivery should be contracted out, and, after it has been contracted out, to the actions and decisions of the private contractors at the instance of third parties, such as the intended beneficiaries of the services, who are not parties to any contract for the delivery of the services affecting them.[53]In this case the public law challenge is to the validity of a decision or action by the local authority at the instance of the party with whom it has made a legally enforceable contract for the delivery of specified services. The decision of the judge hearing the application for judicial review to make an order for specific performance of the contract, on an amendment to plead an alternative private law claim, has generated interesting arguments discussed by Neuberger LJ. I wish to make a few brief comments on some of them.[54]First, neither side has taken up an extreme position. Mr Knafler for the Company has not contended that judicial review is available against the Council simply because it is a public authority. Mr Straker for the Council has not argued that the mere existence of a relevant contract excludes the possibility of judicial review against a public authority.[55]Secondly, a public authority could, in principle, both be subject to claims in private law for breach of contract and to judicial review for breach of public law duties or abuse of public law powers in connection with a contract made by it.[56]Thirdly, in order to attract public law remedies, it would be necessary for the applicant for judicial review to establish, at the very least, a relevant and sufficient nexus between the aspect of the contractual situation of which complaint is made and an alleged unlawful exercise of relevant public law powers.[57]Fourthly, the respective positions of the parties on where to draw the line of the crucial private law/public law divide are helpful. Mr Knafler wants a mandatory remedy in respect of what he contends is a defective support services review conducted by the Council. He does not mind whether it is private law decree of specific performance, as was granted by the judge, or a mandatory order in public law, which was declined by the judge. He argues that the judge was right to grant specific performance, as there was a contract containing an obligation which he contended had not yet been properly performed by the Council. Alternatively, if the judge was wrong to order specific performance, he should have made a mandatory order in public law in accordance with Mr Knafler’s primary case. The alternative private law remedy of damages was inadequate. The Company was entitled to have the support services review obligation properly performed in public law, as it was relevant to the grant of a new contract by the Council. There was, he contended, a sufficient public law element in the situation to attract the protection of public law. The obligation in the contract to carry out a support services review was underpinned by public law considerations derived from the 2000 Act, the Scheme, the 2003 guidance and the Council’s published rules about reviews.[58]Against that Mr Straker’s position is quite simply that the review was carried out by the Council under the express provisions for one, and only one, review; that, in accordance with the agreed terms, the contract expired at the end of 1 year after the review; that the judge was clearly wrong to order specific performance to require the carrying out of a further review under a contract which did not provide for one and which had, in any event, expired; and that Mr Knafler could not opt for a public law remedy to compel the performance of a private law contractual obligation on the ground that such a remedy was unavailable in private law.[59]Fifthly, I agree with Neuberger LJ that this was not a public law case. The action of the Council in conducting the support services review was not amenable to judicial review, because there was no sufficient nexus between the conduct of the review and the public law powers of the Council to make this a judicial review case. The required public law element of unlawful use of power was missing from the support services review. The substance of the dispute between the Council and the Company was about the expiration of the Agreement after the Council had conducted the support services review under clause 11. The Council had entered into the Agreement with the Company in April 2003. The trigger provision for the expiry of the Agreement was the conduct of the support services review as contained in clauses 1.1, 2.2 and 11.2-11.3 of the Agreement. The source of the power of the Council’s support services review was in the Agreement, not in the legislation or in the non-statutory 2003 Guidance and published rules. The Agreement governed the review. It spelt out the agreed consequences of a review for the life of the Agreement. Formal notice of the result of the review was given by the Council on 16 July 2004. The breach of the Agreement found by the judge did not, he held, prevent it from being a valid review for the purposes of triggering the expiration provisions. The Council declined the request of the Company to re-open the review, contending that the effect of the clause under which the support services review was conducted by it was to bring the Agreement to an end. The Company did not want the Agreement to come to an end. It sought an order quashing the review, an order requiring the Council to conduct a review “according to law” and a declaration that, until the completion of the review, the Agreement remained extant.[60]Sixthly, although the grounds for the judicial review application use public law language of a “decision” taken by the Council on cost-effectiveness matters in the review, of taking account of irrelevant considerations and failing to have regard to have regard to relevant considerations and of procedural unfairness in the review process, this terminology does not alter the substance of the dispute as to whether or not the Agreement had come to an end in accordance with its terms. That turns on the provision of the Agreement that that the Agreement comes to an end at the expiration of 12 months from the review. Termination of the Agreement turned on the operation of the contract according to agreed terms, not on the exercise of a statutory or common law public law power of the council which was amenable to judicial review.[61]Seventhly, it cannot be right in principle for a party to a contract with a public authority to have recourse to public law remedies simply on the ground the private law remedies, such as specific performance, are not available after the relevant contractual obligations have expired, or because they are too vague and uncertain to be specifically enforceable by the court, or because alternative private law remedies, such as damages for breach of contract, are inadequate. The relevant remedies are those available in private law for breach of contract.[62]Finally, although the judge was right to reject the claim for judicial review of what was essentially a breach of contract rather than an unlawful use of public power, he was wrong to make a decree of specific performance of an expired contractual obligation.

Cited in 18 later judgments

and 9 more of the most senior