McCarthy & Stone (Developments) Ltd v Richmond upon Thames LBC [1989] UKHL 4

House of Lords
Between
McCarthy & Stone (Developments) LtdAppellantRichmond upon Thames LBCRespondent
Before
Lord Mackay of ClashfernDate 27 October 1987
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 28th day of February 1990 complained of in the said Appeal be, and the same is hereby, Set Aside and that the Order of Mr. Justice Popplewell of the 30th day of January 1989 be, and the same is hereby, Set Aside: And it is further Ordered, That the decision of the London Borough of Richmond upon Thames of 27th October 1987 be quashed and that it be declared that the London Borough of Richmond upon Thames has no power to charge a fee for answering enquiries or requests for information before the making of an application for planning permission: And it is also further Ordered, That the Respondents do pay or cause to be paid to the said Appellants the Costs incurred by them in the Courts below and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments if not agreed between the parties: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Queen's Bench Division of the High Court of Justice to do therein as shall be just and consistent with this Judgment.

Cler: Parliamentor

Judgment: 14.11.91

HOUSE OF LORDS

MCCARTHY & STONE (DEVELOPMENTS) LIMITED

(APPELLANTS)

v.

LONDON BOROUGH OF RICHMOND UPON THAMES

(RESPONDENTS)

Lord Chancellor Lord Bridge of Harwich Lord Brandon of Oakbrook Lord Ackner Lord Lowry

LORD MACKAY OF CLASHFERN L.C.

My Lords,I have had the advantage of reading in draft the speech to be delivered by my noble and learned friend, Lord Lowry. I agree with him that this appeal should be allowed with costs, for the reasons he gives.

LORD BRIDGE OF HARWICH

My Lords,I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Lowry. I agree with it and for the reasons he gives I would allow the appeal.

LORD BRANDON OF OAKBROOK

For the reasons given in the speech to be delivered by my noble and learned friend, Lord Lowry, I would allow the appeal.

LORD ACKNER

My Lords,I have had the advantage of reading in draft the speech to be delivered by my noble and learned friend, Lord Lowry. I agree

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with it and for the reasons he gives I, too, would allow this appeal with costs.

LORD LOWRY

My Lords,This appeal is concerned with the legality of the policy of the Council of the respondents London Borough of Richmond-upon- Thames ("the Council") which it adopted on 2 July 1985 and under which it has made a charge for consultations concerning speculative development or redevelopment proposals between developers and the Council's planning officers preliminary to the making of formal applications for planning permission. The charge fixed by the Council (which was selective) was £25 and is conceded to be reasonable in both its incidence and its amount. It is, however, the lawfulness of charging at all for this service which is in issue.The appellants McCarthy & Stone (Developments) Limited ("the developers") paid under protest for two consultations which were held on 13 August 1986 and 12 January 1987 and then, having first made unsuccessful representations to the Council concerning the legality of its policy, sought by way of judicial review to challenge the Council's decision (contained in a letter dated 27 October 1987) to continue the practice of charging for preliminary consultations.Popplewell J. dismissed the developers' application and the Court of Appeal (Slade and Mann, L.JJ. and Sir David Croom- Johnson) unanimously dismissed the appeal from his decision. The judgment of the Court was delivered by Slade L.J. and contains an admirable summary of the facts which I could not hope to improve on and which I gratefully adopt ([1990]) 2 W.L.R. 1294, 1296A- 1297H).The Council is a local planning authority and by virtue of section 29 of the Town and Country Planning Act 1971 (now superseded by the Town and Country Planning Act 1990, of which the corresponding provision is section 70) was charged with the duty of determining applications for planning permission properly submitted to it. Section 87(1) of the Local Government, Planning and Land Act 1980 empowers the Secretary of State to provide by regulations for the payment of a fee of the prescribed amount to a local planning authority in respect of planning applications. Such regulations have been made, but it is common ground that the fees which they authorise (or could properly authorise, having regard to the power conferred) relate only to planning applications and not to any pre-application enquiries or consultations.It is agreed that, in order to charge for pre-application advice, the Council needs a further statutory authority and that that authority must be found, if found at all, in section 111(1) of the Local Government Act 1972 ("the Local Government Act") either in express words or by necessary implication. The section reads as follows:

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"(1) Without prejudice to any powers exercisable apart from this section but subject to the provisions of this Act and any other enactment passed before or after this Act, a local authority shall have power to do 'any thing (whether or not involving the expenditure, borrowing or lending of money or the acquisition or disposal of any property or rights) which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions.
For the purposes of this section, transacting the business of a parish or community meeting or any other parish or community business shall be treated as a function of the parish or community council.A local authority shall not by virtue of this section raise money, whether by means of rates, precepts or borrowing, or lend money except in accordance with the enactments relating to those matters respectively.

(4) In this section 'local authority' includes the Common Council."

The basis for the proposition, which was accepted by both sides, that statutory authority to charge is required is the well- known principle exemplified by the ratio decidendi of Attorney- General v. Wilts United Dairies Limited (1921) 37 T.L.R. 884 (C.A.); (1922) 38 T.L.R. 781 (H.L.):
"In these circumstances, if an officer of the executive seeks to justify a charge upon the subject made for the use of the Crown (which includes all the purposes of the public revenue), he must show, in clear terms, that Parliament has authorized the particular charge. The intention of the Legislature is to be inferred from the language used, and the grant of powers may, though not expressed, have to be implied as necessarily arising from the words of a statute; but in view of the historic struggle of the Legislature to secure for itself the sole power to levy money upon the subject, its complete success in that struggle, the elaborate means adopted by the Representative House to control the amount, the conditions and the purposes of the levy, the circumstances would be remarkable indeed which would induce the Court to believe that the Legislature had sacrificed all the well-known checks and precautions, and, not in express words, but merely by implication, had entrusted a Minister of the Crown with undefined and unlimited powers of imposing charges upon the subject for purposes connected with his department."
(per Atkin L.J., 37 T.L.R. 884, 886.) At p. 887 Atkin L.J. further observed:
"It makes no difference that the obligation to pay the money is expressed in the form of an agreement. It was illegal for the Food Controller to require such an agreement as a condition of any licence. It was illegal for him to enter into such an agreement. The agreement itself is not enforceable against the other contracting party; and if he had paid under it he could, having paid under protest,

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recover back the sums paid, as money had and received to his use."

I refer also to the observation of Scrutton L.J. at p. 885:
"It is conceivable that Parliament, which may pass legislation requiring the subject to pay money to the Crown, may also delegate its powers of imposing such payments to the executive, but in my view the clearest words should be required before the courts hold that such an unusual delegation has taken place. As Wilde C.J. said in Gosling v. Veley, 12 Q.B., at p. 407:
'The rule of law that no pecuniary burden can be imposed upon the subjects of this country, by whatever name it may be called, whether tax, due, rate or toll, except under clear and distinct legal authority, established by those who seek to impose the burden, has been so often the subject of legal decision that it may be deemed a legal axiom, and requires no authority to be cited in support of it."'
It is further conceded by the Council that the principle applies, whether the money is to be received by the Crown or central Government or by a local authority such as the Council here.In order to succeed in the appeal, the developers must demonstrate to your Lordships that the Court of Appeal were wrong, but, speaking generally, as the courts below rightly said, it is for the local authority to show that it has the right to charge for the service provided.My Lords,I have said that the power to charge a fee for the relevant service must, if it exists, be found in section 111(1) either expressly or by necessary implication. This provision, as both sides agree, gives statutory recognition to the common law rule governing the activities of local authorities and other statutory corporations, as recognised in such well-known authorities on the doctrine of ultra vires as Ashbury Railway Carriage Co. v. Riche (1875) LR 7 HL 653 , A.-G. v. Great Eastern Railway Co. (1880) 5 AppCas 473 and A.-G. v. Fulham Corporation [1921] 1 Ch. 440. A local authority could at common law do anything which was reasonably incidental to its functions and the Council here relies on the proposition that to impose a charge for pre- application advice is reasonably incidental, not merely to the giving of that advice, but also to the Council's function of considering and determining applications for planning permission.The definition of "function" is important and I would therefore refer at this point to the recent case of Hazell v. Hammersmith and Fulham London Borough Council and others [1990] 2 Q.B. 697 (D.C. and C.A.); [1991] 2 W.L.R. 372 (H.L.) where certain local authorities had engaged in speculative financial transactions and their power to do so was in question. In the Divisional Court Woolf L.J. reviewed section 111(1) and continued (p. 722D):
"This subsection puts in a statutory form the long- established principle that local authorities have implied power to do anything which is ancillary to the discharge of any of their functions.

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"The fact that subsection (1) is expressly made subject to 'the provisions of this Act' make it clear that it is important to construe section 111(1) in its context. The reference to expenditure, borrowing or' lending, etc., within the brackets in the subsection do not themselves confer any power to expend, borrow or lend money, etc., but only make it clear that the fact that those activities are involved does not prevent the activities being within the power of the authority which are authorised by this subsection.
"The critical part of the subsection are the words 'calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions.' Before the subsection can authorise an activity which is not otherwise authorised there must be some other underlying function which is authorised, to the discharge of which, the activity will facilitate or be conducive or incidental.
"What is a function for the purposes of the subsection is not expressly defined but in our view there can be little doubt that in this context 'functions' refers to the multiplicity of specific statutory activities the council is expressly or impliedly under a duty to perform or has power to perform under the other provisions of the Act of 1972 or other relevant legislation. The subsection does not of itself, independently of any other provision, authorise the performance of any activity. It only confers, as the sidenote to the section indicates, a subsidiary power. A subsidiary power which authorises an activity where some other statutory provision has vested a specific function or functions in the council and the performance of the activity will assist in some way in the discharge of that function or those functions."
In the Court of Appeal Sir Stephen Brown, P., delivering the judgment of the court, adverted to A.-G. v. Great Eastern Railway Co . supra and, having set out section 111(1), said (at p. 785C):
"Standing by itself, this subsection would not seem to give rise to any particular difficulty. We agree with the Divisional Court that in this subsection the word 'functions,' which is accompanied by no statutory definition, is used in a broad sense, and is apt to embrace all the duties and powers of a local authority: the sum total of the activities Parliament has entrusted to it. Those activities are its functions. Section 111(1) confirms that, subject always to any contrary statutory provision, a local authority has power to do all the ancillary things requisite for carrying out those activities properly. This construction accords with the codifying purpose for which the subsection was enacted."
In this House Lord Templeman said at p. 383C:
"In Attorney-General v. Great Eastern Railway Co. (1880) 5 AppCas 473 , Lord Blackburn said, at p. 481:
'where there is an Act of Parliament creating a corporation for a particular purpose, and giving it powers for that particular purpose, what it does not

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expressly or impliedly authorise is to be taken to be prohibited; ...'

"In the same case Lord Selborne L.C. said, at p'. 478, that the doctrine of ultra vires:
'ought to be reasonably, and not unreasonably, understood and applied, and that whatever may fairly be regarded as incidental to, or consequential upon, those things which the legislature has authorised, ought not (unless expressly prohibited) to be held, by judicial construction, to be ultra vires.'
"In the same vein Lord Blackburn said, at p. 481:
'those things which are incident to, and may reasonably and properly be done under the main purpose, though they may not be literally within it, would not be prohibited.'
"Section 111 embodies these principles.
"I agree with the Court of Appeal [1990] 2 Q.B. 697, 785c that in section 111 the word 'functions' embraces all the duties and powers of a local authority; the sum total of the activities Parliament has entrusted to it. Those activities are its functions."
The observations of my noble and learned friend Lord Ackner at p. 398B were to the same effect where he said, "I accept that 'functions' in section 111(1) covers the powers and duties of the local authority under the various provisions of the Act." (emphasis supplied.)It is, accordingly, clear that the consideration and determining of planning applications is a function of the Council, but the giving of pre-application advice, although it facilitates, and is conducive and incidental to, the function of determining planning applications, is not itself a function of the Council.Thus, it is one thing to say that the giving of pre- application planning advice facilitates or is conducive or incidental to the Council's planning functions but it is quite another thing to say that for the Council to charge for that advice also facilitates or is conducive or incidental to those functions. The Council presented its case on the basis that charging for the service facilitates, or is conducive or incidental to, the giving of the pre- application advice but, even assuming that to be a fact this way of presenting the case would simply amount to saying that imposing a charge facilitates, or is conducive or incidental to, a service which in its turn facilitates, or is conducive or incidental to, the Council's planning functions. The developers, on the other hand, submit that, in order to qualify as something which is authorised by section 111(1) the imposition of a charge for pre- application advice must facilitate, or be conducive or incidental to, the planning functions themselves. If not, the developers contend, the charge is not within the powers of the Council, since it is admittedly not authorised by any provision outside section 111. In this connection the argument that something which is incidental to

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the incidental (but not incidental to the function) does not pass the test is not a novelty: see Attorney-General v. Manchester Corporation [1906] 1 Ch 643 , 656 per Farwell J., cited in Hazell v. Hammersmith and Fulham London Borough Council supra at p. 724.My Lords,let me now turn to another argument for the Council which found favour in the courts below. In their judgment the Court of Appeal have contrasted functions, such as planning, which the Council has a duty to provide, with those, such as providing a museum, a library or a public park, which it has power to provide, on the basis that without statutory authority the Council cannot charge for the provision of a function which it has a duty to provide, whereas it can charge for a function which it has merely power to provide (or not to provide) at its discretion. Thus, it is said, the Council can charge for a service which at its discretion it provides by virtue of section 111(1), as facilitating or being conducive or incidental to the relevant function (in this case the function of considering and determining planning applications.)My Lords,the Council's interpretation of section 111(1) is built on that proposition, but I consider its reasoning to be mistaken, because it does not by any means follow that all of the discretionary functions of the Council or all of the facilitating or incidental activities contemplated or possibly contemplated by section 111 are services for which it is permissible to charge in the absence of express authority to do so. The rule is that a charge cannot be made unless the power to charge is given by express words or by necessary implication. These last words impose a rigorous test going far beyond the proposition that it would be reasonable or even conducive or incidental to charge for the provision of a service. Furthermore, as it seems to me, the relevance of the contrast attempted to be drawn, with respect to the power of a council to charge, between duty functions and discretionary functions is vitiated when one has regard to the large number of discretionary functions for the provision of which express statutory authority to charge has been enacted. I am not impressed by the submission that an express power to charge for the performance of discretionary functions may have been conferred "for the sake of clarity."In support of its case the Council instanced situations in which, without any express authority, it seemed obvious that a charge would properly be made, but to say that the Council can receive payment for the sale of redundant and worn out equipment does not, to my mind, advance the argument that a Council can without statutory authority charge for a service. The power to sell, for example, old motor cars for which the Council no longer has a use necessarily implies that, in the interests of the ratepayers, the Council will recover from a commercial transaction the return which any seller would expect to receive, as a normal incident of local government administration. The provision for a financial consideration of facilities to hold a conference was also discussed. This, on the assumption that it is a legitimate activity, has the character of conducting a business, and it would be a strange and unjust result if those who enjoyed the use of the facilities provided were to do so at the expense of the ratepayers or their modern equivalent. I would not be prepared to say (and it is for present purposes unnecessary to say) that, in the absence

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of express statutory power, there can never be a case in which the power to charge arises by necessary implication, but I have heard no convincing argument to show how the present facts, could support such an implication.The Council has cited Harris v. Wyre Forest District Council [1988] Q.B. 835 (C.A.); [1990] 1 AC 831 (H.L.), where, as a prospective mortgagee, the local authority charged the prospective purchasers and mortgagors of a house a valuation and administration fee of £22. The explanation for this may be that Parliament, having authorised the council to lend money on mortgage and having, by section 43(3)(e) of the Housing (Financial Provisions) Act 1958, required the council to obtain a valuation before advancing any money, must be taken to have authorised the council to conduct its business transaction in the same way as a bank or a building society might do. The question in that case, as your Lordships will recall, was not concerned with the lawfulness of demanding payment of the £22 fee. That point was not discussed and I refrain from discussing it now.Your Lordships have seen the affidavit of Mr. G. R. Cheesman, assistant head of legal services with the Council. There is, of course, statutory authority for a council to charge for a land charges search. As for the charges made for the other services mentioned, they would all need to be considered individually in order to decide by what authority, if any, and with what propriety each one has been imposed.Mr. Scrivener, for the developers, relied before your Lordships, as he had in the Court of Appeal, on section 150 of the Local Government and Housing Act 1989 which only came into force on 16 January 1990, having received the Royal Assent on 16 November, 1989. It reads:
"(1) The Secretary of State may make regulations providing that a charge may be imposed in respect of anything -
which is done by any relevant authority or by any relevant authority of a prescribed description,which is prescribed or falls within a prescribed description,(c) in respect of which there is no power or duty to impose a charge apart from the regulations, and (d) which is not done in the course of exercising an excepted function.The regulations may include such provision as the Secretary of State sees fit as regards charges for which the regulations provide; and nothing in subsections (3) to (5) below or section 190(1) below is to prejudice this.

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

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(b) may provide that the amount of a charge (if imposed) is to be at the authority's discretion or to be at its discretion subject to a maximum:(4) Where the regulations provide that a charge may not exceed a maximum amount they may -provide for one amount, or a scale of amounts to cover different prescribed cases;prescribe, as regards any amount, a sum or a method of calculating the amount.The regulations may include such supplementary, incidental, consequential or transitional provisions as appear to the Secretary of State to be necessary or expedient.No regulations may be made under this section unless a draft of them has been laid before and approved by a resolution of each House of Parliament."It should be noted that regulations made pursuant to this provision are to be subject to affirmative resolution of both Houses.The claim on the part of the developers is that the enactment of this section shows that the Council's interpretation of section 111(1) cannot be well-founded, because, if it were, section 150 would be left without a useful function. I do not think, however, that this contention is necessarily correct, because section 150(l)(c) might be contemplating a duty function in regard to which neither a power nor a duty to charge had been enacted. The circumstances in which resort can be had to later legislation for the purpose of statutory interpretation are not entirely clear: see Maxwell, Interpretation of Statutes 13th edition pp. 69-71 and Ormond Investment Co. v. Betts [1928] A.C. 143, but I do not propose to trouble your Lordships with a discussion of the point on this occasion because I do not consider in any event that section 150 of the Act of 1989 provides a reliable indication as to the meaning of section 111. Two things, however, can be said: section 150(3)(a) does not make in the charging context any distinction between discretionary functions and duty functions; and the legislature, having enacted section 150, has provided a convenient means of tidying up a confused scene, so far as charging for services in the future is concerned.What the Court of Appeal had to say about section 150 in their judgment is found at p. 1304E:
". . . section 150 et seq. of the Local Government and Housing Act 1989 contain a number of new provisions relating to the imposition of charges by certain authorities, but we do not think that this legislation affects the question which we have to decide."
I respectfully agree.The developers in their notice of appeal from Popplewell J. put forward another argument based on section 111(3) to the

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effect that that subsection completely prevents a local authority from raising money by virtue of section 111, and in particular by virtue of section 111(1), with the result that no charge can be made for any service unless authority is found outside section 111. The Court of Appeal, quite rightly in my view, rejected that argument. The subsection forbids(1) the raising of money by any one of three methods and(2) the lending of money, in each case except in accordance with the specific enactments which deal with the subject. The developers' argument would require the addition of the words "or otherwise" after the word "borrowing" to get off the ground and, even then, in the context of "rates, precepts or borrowing," to equate charging for a service with the raising of money appears to me to demand a very forced interpretation of language. I therefore agree with the conclusion of the Court of Appeal that section 111(3) "imposes no restrictions on the Council's powers directly material for present purposes." I would, however, point out that section 111(3), on its true construction, does not provide any affirmative support for the argument that section 111(1) is an authority for making the charge with which this appeal is concerned.The clues to interpretation to be derived from other statutory provisions were of modest persuasive force, but perhaps I might mention certain paragraphs of circular 28/83 issued jointly by the Department of the Environment and the Welsh Office on 29 December 1983:
"7. The Secretaries of State recognise that local planning authorities are concerned to ensure that the development control system is operated in a way which serves the best interest of the community and secures developments of good quality. They also attach great importance to the timely handling of planning applications, and authorities are reminded of the need to take account of the advice contained in DOE Circular 22/80 (Welsh Office Circular 40/80). Local authorities, applicants and consultees all have important roles to play in ensuring not only a speedy and efficient service but also one which takes proper steps to secure local planning policies.
"8. Local authorities' attention is drawn to the need for: (i) prompt decisions to be seen to be a priority by local authority members and officers;
(ii) procedures to be designed to avoid unnecessary delay;(iii) those procedures to be reviewed periodically and adjustments made to meet changing circumstances;(iv) early informal discussions with applicants and their agents to be encouraged. Where possible, these should include discussion about features of schemes which may give rise to the imposition of conditions in the event of permission being granted. Applicants can then consider the scope for adjusting the scheme prior to formal submission of a planning application so as to render the conditions unnecessary if the local planning authority are minded to grant planning permission;

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(v) planning departments to(a) co-ordinate the requirements of statutory consultees;(b) make particular efforts to resolve any conflicting requirements; and(c) where necessary, invite those organisations and departments with an interest in applications to be represented at any meetings with applicants or their agents.
"9. The attention of applicants is drawn to the need for early discussions to be held with local planning authorities so that:
. . .
"16. There will be some financial and manpower costs associated with the implementation of this code. These costs will vary between local authorities according to the extent to which information is already collected by them for their own use. However, there may be some off-setting benefits to be obtained by local authorities from the use of the information required by the code in the management of their development control duties. . . ."
The developers placed some reliance on paragraph 16 as showing that local authorities were expected to incur expense by providing a mutually helpful service, but, as your Lordships have seen in the present case, even if fees were charged, the recommended service was unlikely to pay for itself out of direct revenue. I do not consider that it is either justifiable or necessary for the developers to look to such a slender argument in order to support their case.My Lords,I come back to section 111(1), the relevant provision. The Council admits that it cannot without express authority charge for a "duty function," but it still has to say that the ability to charge for pre-application advice is based on the "power to do any thing" which is "incidental" (I deliberately choose the most neutral qualification) "to the discharge of any of (the Council's) functions." To charge for performing a function (subject always to Wednesbury considerations, which do not arise here) must always be incidental to the provision of the service provided. Therefore the Council's interpretation of section 111(1) would allow it to charge for the performance of every function, both obligatory and discretionary, which provided a service. (And, even without section 87(1), there would be nothing unreasonable or irrational in charging a proper fee for determining a planning application.) Such a construction of the subsection cannot possibly be justified, and I say this before even considering the point that, in the absence of express statutory authority, the power to charge can only be implied, in the words of Atkin L.J. supra "as necessarily arising from the words of a statute."There is yet a further point, to which I have already adverted. As the Court of Appeal have said (p. 1302H), the power to give pre-application advice is neither a duty nor a discretionary express power, but is a subsidiary power arising by virtue of section 111(1) (which has codified the common law), because it is calculated to facilitate, or is conducive or incidental to, the discharge of one of the Council's functions. To charge for the

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exercise of that power is, at best, incidental to the incidental and not incidental to the discharge of the functions.A further point (p. 1303D-H) which commended itself to the Court of Appeal was the argument that, since the Council was not obliged to provide the service in question, it could state on a "take it or leave it" basis that it was willing to provide it for a reasonable fee, as if entering into a contract. I consider this to be an untenable proposition which, if correct, would justify a local authority in charging for any discretionary service, but which in reality is in conflict with the second principle enunciated by Atkin L.J. in A.-G. Wilts United Dairies Ltd. supra at p. 887 (already cited).My Lords,for these reasons I would allow the appeal and would order the Council to pay the developers' costs in this House and in the courts below.

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