Ombudsman had “implied power” to withdraw flawed decision and re-open investigation, High Court finds

The High Court has found that the Local Government and Social Care Ombudsman (LGSCO) has an implied power to withdraw a final report and remake a decision where it considers it flawed by legal error, following a judicial review over its decision to walk back a finding of injustice at Tewkesbury Borough Council.

In Piffs Elm Ltd v Commission for Local Administration In England [2022] EWHC 1547 (Admin) (20 June 2022), Judge Heather Williams DBE concluded that the LGSCO had the power to withdraw its decision and re-open an investigation, despite there being no direct authority on the issue.

The legal dispute began after a series of refusals of planning applications in 2016 made by Piffs Elm Limited (PEL).

In 2016, PEL lodged a separate judicial review of the second refusal of planning permission, which led to a finding by Judge Jarman QC, sitting as a High Court judge, that the circumstances gave rise to an appearance of bias. 

However, the judge declined to grant any relief to PEL as there was an available alternative remedy by appealing to the Secretary of State.

After the local authority decided not to determine a third application – resulting in the forfeiture of a £41,244 planning application fee – PEL submitted a complaint to the Ombudsman disputing the decision not to return the fee.

An Ombudsman investigation was launched, which concluded that the council had caused injustice and was at fault because it did not consider exercising its discretion to return the fee. The court named this the August 2019 decision.

But the local authority threatened legal action against the LGSCO over the investigation's findings. Its pre-action protocol letter to the LGSCO said the decision was legally flawed as the council had no power to refund the fee, or, if there was such a power, the position was sufficiently uncertain that the refusal to do so was incapable of amounting to maladministration.

Upon taking legal advice, the LGSCO concluded the August 2019 decision was legally flawed, and it re-opened the investigation. The court called this development the November 2019 decision.

A year and a half later, the Ombudsman issued its final report, which now found that the council was not at fault (the February 2021 decision).

PEL then brought a judicial review against the LGSCO for walking back the decision.

The following grounds were lodged by PEL:

August 2019 decision

1. Did the LGSCO err in law in concluding that Tewkesbury Borough Council (TBC) had a discretion to refund the planning fee and in consequently finding maladministration (TBC's Ground 1);
2. Alternatively, if the LGSCO was correct to find there was a discretion to refund the planning fee, was his conclusion that TBC acted maladministratively irrational, flawed by a failure to take into account relevant considerations and/or inadequately reasoned (TBC's Ground 2);
3. In any event, if there was a discretion to refund the planning fee, would it have been Wednesbury unreasonable for TBC to have refunded the fee in the present case (TBC's Ground 3);
4. Did the LGSCO err in concluding that he lacked jurisdiction to determine the part of the complaint relating to the s.70A decision (PEL's original Ground 4);

November 2019 decision

1. Did the LGSCO have the power to withdraw the August 2019 decision, re-open the investigation and issue a new report (PEL's original Ground 1: "the Withdrawal Ground");

February 2021 decision

1. Did the LGSCO err in law in refusing to consider TBC's actions "in the context of the judicial review, and any previous planning applications" when determining whether there was any fault resulting in injustice in its refusal to return the third planning application fee; and/or did he fail to give adequate reasons for this conclusion (PEL's additional Ground 1: "the Context Ground"). (The reference to a judicial review is to PEL's challenge to TBC's refusal of its second planning application);
2. Did the LGSCO err in concluding that he lacked jurisdiction to determine the part of the complaint relating to the s.70A decision (PEL's additional Ground 2: "the s.70A Ground");
3. If the judge accepted that the contention is arguable, did the LGSCO err in law in concluding that there was no fault resulting in injustice in TBC's refusal to return the third application fee because there was a "respectable legal argument" that it had no power to do so; and/or did he fail to give adequate reasons for this conclusion (PEL's additional Ground 2: "the Fault Ground")?

The case turned on the withdrawal ground. "There is no direct authority on whether, and if so, in what circumstances the LGSCO has power to re-open an investigation after issuing a final report and this issue loomed large in the submissions made to me," the judge said.

The LGSCO's counsel submitted that the power to withdraw a report would apply where there was a "compelling reason for doing so". However, PEL's solicitors argued that the Local Government Act 1974 lays down a complete, prescriptive statutory code, which does not admit of the implication of additional powers.

In concluding, the judge did not accept PEL's argument, noting that the 1974 Act "provides for the LGO to have a large measure of discretion in relation to what is investigated, the process that is adopted and the conclusions that are reached; and the process is relatively informal".

The judge found that there is "an implied power to withdraw a final report and remake the decision where the LGO reasonably considers that the decision is flawed by legal error; and that such a power is consistent with, rather than contrary, to the LGA 1974 provisions".

She added that she did not consider the implied power to undermine the statutory scheme, "[to] the contrary, this would be consistent with and promote good administration".

"For all these reasons I would be strongly inclined to conclude that the LGSCO does have the power to withdraw a report that he / she considers to be flawed by legal error and to re-open the investigation and issue a new report," the judge said.

PEL's challenge to the November 2019 decision failed as a result of the judge finding the LGSCO was entitled to withdraw the August 2019 decision.

PEL's alternative submission that the legal errors in the August 2019 decision in any event rendered it null and void, meaning that there was no s.30(1) decision in existence when the February 2021 decision was made also fell away, the judge added.

The remaining grounds also failed.

Adam Carey