Council fends off JR challenge after withdrawal of law centre funding

A law centre in London has lost a judicial review challenge in the High Court over a local authority’s decision to withdraw its funding.

Greenwich Community Law Centre (CLC) brought the claim after the London Borough of Greenwich decided to withdraw funding from 11 November 2011.

In Greenwich Community Law Centre, R (On the Application Of) v Greenwich London Borough Council [2011] EWHC 3463 the law centre sought to challenge this decision on a number of grounds.

These included a claim that the council had failed to have regard to the consequences of the decision, in particular its impact on its existing vulnerable clients.

Greenwich CLC also challenged the decision-making process as regards aspects of the work which the local authority decided to fund. That process resulted in the allocation of funds to Plumstead CLC and Greenwich Housing Rights.

Greenwich Council denied that the decision was unlawful. It also argued that since the successful bidders had received funding and taken over the services formerly provided by Greenwich CLC, any remedy which interfered with that position would be detrimental to third parties and highly prejudicial to good administration.

In a ruling handed down just before Christmas, Mr Justice Cranston found in favour of the local authority and dismissed the law centre’s challenge.

He rejected Greenwich CLC’s submission that the council had failed to provide an orderly transition from the old to the new arrangements and to comply with the National and Greenwich Compacts on withdrawing funding from third sector organisations.

The judge said the outcome of this ground of challenge turned on the background facts. These included severe pressure on the council’s budget as a result of central government’s decision on public expenditure.

A letter from the authority’s deputy leader in December 2010 had cautioned providers to prepare for the worst. Greenwich CLC’s funding was to finish on 31 March 2011, but had been extended by a further six months until 30 September while the council pursued re-commissioning.

The council then decided on a modular approach, which it considered to be more efficient. Greenwich CLC was aware by 2 August that its housing and welfare benefits bid had been disqualified for lateness. At the end of the month it was also aware that council officers had not evaluated its immigration and employment bid favourably.

“After cabinet’s decision on 20 September, the writing was on the wall,” the judge said. “Greenwich CLC's poor evaluation meant that the call-in was unlikely to affect the outcome. Thus there was the period of some eight weeks between cabinet's approval of the decision not to contract further with Greenwich CLC on 20 September and the end of funding on 11 November.”

Mr Justice Cranston said that, as a matter of law, Greenwich CLC got “nowhere near surmounting the high threshold of an irrationality challenge”.

He pointed out that the centre had known for months of the council’s budgetary position and its implications, of the authority’s desire to change the mode of delivery for the legal advice services in the borough, and that its existing grant (including an interim grant) would come to an end.

The judge added that Greenwich CLC had undertaken the obligation in the interim funding agreement to have in place robust plans for transition to new service providers after 30 September.

The council had meanwhile made various offers after Greenwich CLC was informed of the outcome of the evaluation on 31 August to assist the transition process of existing clients. However, those offers came to nothing.

Mr Justice Cranston said nothing in the National or Greenwich Compacts compelled a different conclusion.

The judge meanwhile rejected a second ground of challenge – which he described as like the first but “kitted out differently” – which claimed that the council had failed to take into account a relevant consideration, in omitting to conduct a risk assessment regarding the transfer of provision from Greenwich CLC to other providers.

The law centre had argued that prejudice would almost certainly be caused to the outcome of at least some of the outstanding disputes.

But Mr Justice Cranston pointed out that Greenwich CLC’s bids were scored as comparatively weak, and that the council was not entitled to take into account the difficulties clients might face if the centre’s funding were to cease.

The latter would have been a departure from the selection criteria on which bids were invited, formulated and decided, he said. “The plain fact is that the tender document was not challenged at the time. It is also the unfortunate reality of the funding process that grants may be terminated and the providers of services, and those benefiting from them, left in the lurch.”

The judge added that there was no evidence before him that Greenwich CLC’s clients had been disadvantaged or could not transfer to the new providers.

Mr Justice Cranston also dismissed a claim that Greenwich Council had breached its equality duty by failing to pay due regard under s. 149 of the Equality Act 2010. The CLC claimed that this duty had only been given fleeting consideration.

The judge pointed out that as a matter of law there was no obligation to conduct a formal equality impact assessment before every decision.

“Here the council conducted an equality impact assessment in March 2011 in advance of its decision not to award funding for legal advice services and instead to conduct a fresh commissioning round,” he said. “It paid due regard in substance to its equalities duties under the Equality Act 2010 by remaining faithful to the focus on priority groups in the tendering exercise.”

The judge concluded that there was no need for a further equality impact assessment with regard to the outcome since the logic of the tender process meant that performance of the duty was integral to the outcome. “Selection of the winning tenders would inevitably pay due regard to the equalities objectives,” he said. “No new or different equalities considerations arose.”

The High Court judge went on to reject – for reasons already given – a challenge under the Human Rights Act 1998 that the council had failed to consider the Article 6 rights of its clients (the right to a fair hearing) when making the decisions under challenge.

The CLC also unsuccessfully alleged that there were defects in the award decision on the bids. Rejecting these claims, Mr Justice Cranston said the discrepancy in the respective bids of Greenwich CLC and Plumstead CLC was considerable.

He concluded that:

• The evidence “rings true that the completion of a few blanks in the final version of Greenwich CLC's bid would not have affected the outcome”
• The council had perfectly rational reasons for preferring the tender of Plumstead CLC over that of Greenwich CLC
• Criticisms made about access, even if true, could not have accounted for the wide gap in the marks awarded to the respective bids.

Greenwich CLC additionally challenged the council’s decision to reject its housing and welfare rights bid as a day late, claiming that the authority had contributed to the error by misleading it as to the closing date for submissions.

The judge said the legal test was irrationality or, if the Public Contracts Regulations 2006 applied, manifest error. There was a typographical error in the tender document, he acknowledged.

But he said he was unable to conclude that the council behaved irrationally or was in manifest error in deciding that the tender documentation as a whole made clear that the deadline was 1 August and that the real fault for the missed deadline lay with the CLC.

Mr Justice Cranston said it was with “considerable regret” that he reached his conclusions he did.

“Greenwich CLC is a long established law centre,” he added. “Its work is well known to this court. In 2009 it was assessed by the council as costing the least per case of all the advice providers in the borough. If the law centre does close it will be a sad day, to say the least, for the staff and its clients.”

The judge said that despite the council's assumptions, it could be that outreach was not the best way of reaching the priority groups. “It also may be that the type of scoring exercise rampant in decision-making these days measures more the ability to write an application than the quality of the applicant. None of these issues are for me.”

However, he concluded that as a matter of legal analysis he could detect no reviewable flaw in how Greenwich Council had behaved in this case.

Philip Hoult