Durham County Council, R (on the application of) v Darlington Borough Council [2003] EWHC 2377 (Admin)

Case No CO/469/2003[2003] EWHC 2377 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Venue Royal Courts of JusticeDate Friday, 25th July 2003
Strand
London WC2
B E F O R E:
MR JUSTICE BLACKBURNE
Between
THE QUEEN ON THE APPLICATION OF DURHAM COUNTY COUNCILClaimant-v-
Between
DARLINGTON BOROUGH COUNCILDefendant
Computer-Aided Transcript of the Stenograph Notes ofSmith Bernal Wordwave Limited190 Fleet Street London EC4A 2AGTel No: 020 7404 1400 Fax No: 020 7831 8838(Official Shorthand Writers to the Court)
MR T STRAKER QC and MR M SHANKS (instructed by MESSRS DICKINSON DEES) appeared for CLAIMANTMR L DRABBLE QC and MR D KOLINSKY (instructed by MESSRS ROWE & MAW) appeared for DEFENDANT
J U D G M E N TFriday, 25th July 2003
[1]MR JUSTICE BLACKBURNE: This is an application for leave to appeal a number of points of law arising out of two separate arbitration agreements. The awards, one of Malcolm Spence QC, published on 6th December 2002, and the other of Mr Christopher Cochrane QC, published on 3rd February 2003, were made under a statutory disputes resolution procedure contained in regulation 19 of the Local Government Changes for England (Property Transfer and Transitional Payments) Regulations 1995.[2]They arise out of the establishment of Darlington Borough Council as a separate unitary authority effected by The Durham (Borough of Darlington) (Structural Change) Order 1995, made by the Secretary of State pursuant to powers contained in the Local Government Act 1992. The order provides that with effect from 1st April 1997 the functions of Durham County Council in relation to the borough of Darlington should, subject to the provisions of Part II of the order and any other relevant provision, be transferred to Darlington Council.[3]Various conditions must be satisfied if leave to appeal is to be given. These being arbitrations, those conditions are set out in section 69(3) of the Arbitration Act 1996. According to that provision:
"Leave to appeal shall be given only if the court is satisfied - (a) that the determination of the question will substantially affect the rights of one or more of the parties, (b) that the question is one which the tribunal was asked to determine, (c) that, on the basis of the findings of fact in the award - (i) the decision of the tribunal on the question is obviously wrong, or - (ii) the question is one of general public importance and the decision of the tribunal is at least open to serious doubt, and (d) that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question."
[4]According to subsection (4):
"An application for leave to appeal under this section shall identify the question of law to be determined and state the grounds on which it is alleged that leave to appeal should be granted."
[5]And according to subsection (5):
"The court shall determine an application for leave to appeal under this section without a hearing unless it appears to the court that a hearing is required."
[6]I am satisfied that the application for leave to appeal identifies the questions of law to be determined and states the grounds on which it is alleged that leave to appeal should be granted. There has, of course, been a hearing which has been helpful, although perhaps it has lasted longer than had originally been intended.[7]Coming to the conditions set out in (3): in approaching the various tests I have very much in mind that the court is not required to give lengthy reasons for its decision, and that it is ordinarily sufficient for the court to indicate whether the condition has or has not been fulfilled. In this respect I have had my attention drawn to the decision in CMACGM v Beteiligungs-Kommanditgesellschaft MS 'Northern Pioneer' Schiffahrtgesellschaft mbH & Co & Others [2002] EWCA Civ 1878. In particular I notice paragraph 20, which refers to the decision of the Court of Appeal in North RangeShipping Ltd v Seatrans Shipping Corporation [2002] EWCA Civ 405.[8]I also have in mind what Lord Phillips said in paragraph 60, after having quoted from Lord Diplock on the Nema guidelines, contrasting them with the wording of what became section 69(3), and in particular sub-paragraph 2, in relation to general public importance:
"... the decision of the arbitrators should be at least open to serious doubt."

Lord Phillips says:

"These words impose a test which is broader than Lord Diplock's requirement that permission to appeal should not be given 'unless the judge considered that a strong prima facie case had been made out that the arbitrator had been wrong in his construction.'"
[10]So I bear that in mind.[11]Coming then to the tests. First:
"(3)(a) that the determination of the question will substantially affect the rights of one or more of the parties."
I am satisfied that that condition applies, and indeed it was not, as I understood it, disputed. Second:
"(b) that the question is one which the tribunal was asked to determine"
That is also so in the case of each of these questions. Third, either:
"(c) that, on the basis of the findings of fact in the award - (i) the decision of the tribunal on the question is obviously wrong..."
I do not consider that that is true of any of the questions which the tribunals were asked to determine. Or:
"(ii) the question is one of general public importance and the decision of the tribunal is at least open to serious doubt..."
[12]Are the questions of general public importance? I am satisfied that they are. The broad reason for that is that these questions arise out of the construction of statutory provisions - regulations - made under powers contained in the Local Government Act 1992. They remain in force and they can be applied to future structural changes under the Act.[13]I bear in mind that the round of local government structural changes which followed the passing of the Local Government Act 1992 have been, as it is said, completed, although there was some doubt as to exactly how many there were and when they were completed.[14]I bear in mind that, so far as counsel are aware, there has only been one arbitration and that, in a sense, there is, as it was put, no track record. But I also bear in mind that, as I have mentioned, the regulations remain in force, as of course does the statute. I also bear in mind the passing recently of the Regional Assemblies (Preparations) Act 2003, which applies provision of the 1992 Act including, in particular, section 19 and, on the face of it, therefore, the 1995 Regulations.[15]Coming to the individual questions, and dealing initially with Mr Spence's award, the first question is:
"Whether, on a proper interpretation of those [1995] regulations, the minority shareholdings of Durham [that is Durham County Council] in Newcastle International Airport Ltd (NIAL) and Teeside International Airport Ltd (TIAL) were 'investments' which were not 'relevant shares' (within the meaning of regulation 3(2)) so as to be excluded from regulation 5 by virtue of regulation 5(1)(a)."
[16]This is a matter dealt with by Mr Spence in paragraphs 37 to 40 of his award. I am not persuaded that Mr Spence's conclusion in those paragraphs is open to serious doubt. That is not to say that I fully endorse his reasoning in paragraph 40. It seems to me, and this, I think, flows from his reasoning, that on a proper construction of the definition of 'relevant shares' in regulation 3, with its reference to section 68 of the Local Government and Housing Act, and the references in that definition, not least to the Companies Act, that his conclusion on that issue is not open to serious doubt.[17]The next issue is:
"Whether, on a proper interpretation of those regulations the shares held by Durham in NIAL, TIAL and Durham County Waste Management Company Ltd... were: (a) held by Durham for the purposes of, or in connection with the exercise of functions in or in relation to Darlington's area and (b) required by Darlington for the purposes of, or in connection with the exercise of functions in or in relation to that area on and after the re-organisation date... So as to be within regulation 5(6)."
[18]This is a matter dealt with in the award between paragraphs 41 and 46 in relation to the shares held in NIAL and TIAL and between paragraphs 51 to 54 in relation to the shares held in the Waste Management Company.[19]I take the view, having carefully considered the matter and listened to arguments on both sides, that, for the reasons essentially set out in paragraphs 23 to 25, 26 to 31 and 35 to 43 of Mr Drabble's written submissions, the conclusions of Mr Spence are not open to serious doubt.[20]I come next to the third of the issues, which is:
"Whether, on a proper interpretation of those regulations, the waste disposal site at Creebeck was held by Durham and required by Darlington as set out... above or whether it was 'surplus land' as defined by regulation 10(7) [which in turns refers back, I believe, to regulation 5(6)]."
[21]So far as this issue is concerned I am persuaded that Mr Spence's award, his decision on this, is open to serious doubt.[22]The question turns on the definition of surplus land and whether at the time that it was acquired, and subsequently, it was acquired in connection with the exercise of a function. I am, as I say, persuaded that the award in that regard is open to serious doubt in his holding that the land was surplus land and, in the circumstances, must always have been surplus land.[23]That brings me to the award of Mr Cochrane in respect of which there are two questions concerning the payment of interest. The first question is:
"(1) whether, on a proper construction of Part III of the Regulations, the 'paying authority' is liable pursuant to Regulation 18(1) to pay interest in respect of any additional sum which has become payable following the determination of a difference under Regulation 19, in respect of any period prior to the service of the notice required by Regulation 16; "(2) whether, assuming the 'paying authority' is not so liable, it was nevertheless open to the Arbitrator to award such interest pursuant to s.49(3) of the Arbitration Act 1996."
[24]On the first part of that, Mr Cochrane's conclusion that the reference in regulation 17(3)(a) to, "the notice setting out the calculations giving rise to the liability to pay," is a reference to the regulation 14 notice and not the regulation 16 notice, and that the regulation 16 notice does no more than effectively retrospectively amend the regulation 14 notice, is open to serious doubt.[25]The alternative basis for his decision on this was that, in any event, section 49(3) of the Arbitration Act comes, as it were, to the rescue in that if he was wrong about the proper approach to regulation 16 there was, as it was put, a lacuna which could be filled by the Arbitration Act.[26]Having heard argument I have some considerable doubt about that, and I have therefore come to the view, at the end of the day, that his decision on that matter is likewise open to serious doubt. I shall therefore give leave under the Act to appeal in relation to, putting it shortly, the Creebeck question, from Mr Spence's award, and the interest questions arising out of Mr Cochrane's award.[27]MR DRABBLE: My Lord, I have a consequent application for costs in relation to the issues on which we have succeeded. Detailed assessment would appear to be appropriate, although we did originally prepare a schedule it has got rather out of date with the time over which we have run.

MR JUSTICE BLACKBURNE: Mr Straker, what do you say?

[29]MR STRAKER: My Lord, I cannot resist that application for costs to be assessed in detail in relation to the questions upon which your Lordship has held against me. My Lord, there is a consequential application which I would wish to make, if I may, which is made under section 69(8) --

MR JUSTICE BLACKBURNE: Yes.

[31]MR STRAKER: -- of the Arbitration Act. This being the subsection which deals, and deals exhaustively, with the ability to get to the Court of Appeal from your Lordship's decision on the questions upon which your Lordship has ruled against me. Your Lordship will see that no appeal lies without the leave of your Lordship, which is not to be given unless it is considered that the question is one of general importance, or is one for which some other special reasons should be considered by the Court of Appeal.[32]In connection with that matter I plainly pray in aid your Lordship's holding to the effect that these were matters of general public importance, to use the words within (3). I would respectfully urge that it is appropriate to grant leave in this circumstance. I do not rehearse the points about importance and difficulties and so forth which I have made before, and which I incorporate into this short request for such leave.

MR JUSTICE BLACKBURNE: Yes.

[34]MR STRAKER: I do though draw attention to the fact that it is perfectly possible for me to say, with all frankness, bearing in mind the care with which your Lordship has evidently given to this particular matter, that these are difficult issues which arise on difficult regulations, with it at least being possible, and I would respectfully put it higher than that, but I am very tentative about my language because one always finds it slightly invidious having had a hearing running over three days and then immediately saying, "I want to chase off to another court please," but it must at least, in my respectful submission, be legitimately capable for Durham to run arguments on these important and difficult regulations before the Court of Appeal, in circumstances where it is already accepted that there is general importance, and that they are difficult matters with the prospect of my being able to persuade the Court of Appeal that there is serious question marks, serious doubts, over these issues in the light of the authority which was given, and to which your Lordship made reference.[35]My Lord, that is all that I would say in connection with that matter in terms of this application for leave to appeal.[36]MR JUSTICE BLACKBURNE: The scope for my doing so is extremely confined having regard to what was said in Northern Pioneer.[37]MR STRAKER: My Lord, it is confined -- plainly the ultimate terms of the grant or refusal of leave is within the terms of that subsection to which I have drawn attention. Your Lordship has that ability to say: yes, this matter can properly be treated by the Court of Appeal. I would respectfully urge that this is a matter which could be properly treated by the Court of Appeal and seen by them, and, I hesitate to say, that they will not get many opportunities to enjoy these 1995 Regulations.

MR JUSTICE BLACKBURNE: No, on your footing they will have lots of them.

[39]MR STRAKER: They will not necessarily get many opportunities to enjoy these regulations, and I respectfully urge that they ought to have at least this chance to enjoy this particular matter.[40]MR JUSTICE BLACKBURNE: I came to a firm view about these matters and I am not persuaded that I should give you permission to appeal. Thank you very much.[41]MR STRAKER: I am much obliged, my Lord.

MR JUSTICE BLACKBURNE: I will make the costs order that was --

[43]MR DRABBLE: My Lord, yes.[44]MR STRAKER: Presumably, my Lord, the costs in relation to the other matters will just be in the appeal.

MR JUSTICE BLACKBURNE: Yes, that is right.

[46]MR STRAKER: I am much obliged.