Court of Appeal finds Ombudsman decision to withdraw report was unlawful, but dismisses appeal by developer

The Court of Appeal has dismissed a developer's appeal concerning whether the Local Government and Social Care Ombudsman had the power to withdraw a final report into Tewkesbury Borough Council's refusal to waive a planning fee, re-open its investigation and then issue a second final report in favour of the council.

In Piffs Elm Ltd, R (on the application of) v Commission for Local Administration in England & Anor [2023] EWCA Civ 486, Lady Justice Elisabeth Laing found that the Ombudsman's decision to withdraw its first report was unlawful but went on to dismiss the appeal.

The dispute dates back to 2015 when developer Piffs Elm applied for planning permission to build an industrial development.

Over the course of a year, the council refused planning permission for the development three times. On the third application, the developer asked for the council to waive the application fee, but the council refused, leading the developer to pay the fee of £41,244.

In 2017, the developer complained to the Ombudsman, contending that Tewkesbury failed to properly consider a High Court judge's findings in a previous judicial review and should not have refused the planning applications.

The Ombudsman launched an investigation into the developer's complaint that the council's "decision to retain a planning application fee after the council used its powers to decline to determine their planning application".

In its report, the LGSCO found that the council's failure to consider exercising its discretion to refund the planning fee amounted to fault, causing injustice to the developer.

It recommended that the council consider whether it intends to exercise its discretion to refund the fee.

However, Tewkesbury sent a pre-action protocol letter to the Ombudsman challenging the report's findings, arguing that either the council had no power to refund the fee or the position was so uncertain that the final planning refusal could not amount to maladministration.

After taking legal advice, the Ombudsman decided that the first report was "legally flawed", withdrew it and re-opened the investigation.

The Ombudsman then reversed its position in the ensuing second report, concluding that the council had not "acted with fault".

It also said it was only investigating the administrative actions of the council in retaining the fee and that it would not be appropriate to make a finding about the legal position as that would "place him at risk of making a legal determination or treading into the jurisdiction of the courts".

The developer consequently launched a judicial review challenging the Ombudsman's decision to withdraw the first report, re-open its investigation and issue a second report, arguing that the Ombudsman did not have the power to do so.

At the High Court, Mrs Justice Heather Williams dismissed Piffs Elm's argument that the Ombudsman had no power to withdraw the first report and dismissed the claimant’s other challenges to the second report.

She also refused permission to hear a ground challenging the council's decision to refuse to refund the planning application fee.

Piffs Elm then appealed to the Court of Appeal, contending that the judge was wrong to conclude that the Ombudsman's withdrawal of its first report was lawful.

It also appealed her finding that both the Ombudsman's first and second reports were lawful.

Ultimately, Laing LJ found that the first report was unlawful and that the Ombudsman had no power to withdraw it and reopen the investigation. However, she also concluded that the publication of the second report was lawful and therefore dismissed the developer's appeal.

Regarding the first report, the judge said: "I consider that the Ombudsman could not lawfully investigate the Complaint as limited and refined by Piffs Elm during the course of the investigation.

"The essence of the Complaint was that the council had refused to return the fee. That Complaint squarely raised, potentially, two legal questions. 

"They were whether the council had power to refund the fee, and, if so, whether their refusal to refund the fee for the reasons they gave at the time (that is, in the letter of 24 November 2016, see paragraph 10, above) was unlawful.”

She noted that the complaint "was not a complaint about a purely administrative act".

The judge concluded that the Ombudsman was "undoubtedly right to conclude that he had no jurisdiction to consider the Complaint".

"That conclusion makes it unnecessary for me to consider the parties' other arguments. For those reasons, Piffs Elm's challenges to [the second report] fail."

Lord Justice Dingemans and Lord Justice Popplewell both agreed.

Adam Carey