Asha Foundation, R (On the Application Of) v Millennium Commission

1. This is an appeal by the Asha Foundation against the decision of Lightman J dated 14 May 2002. Lightman J dismissed Asha's application for judicial review of a decision of the Millennium Commission to refuse an application for capital grant by Asha amounting £10 million. The primary (though not the sole) issue raised on the appeal is the extent of the Commission's obligation in the circumstances of this case to give reason for its decision to refuse that application.

The Factual Background

2. Asha is a charity whose object is the establishment of a museum to be called the Asha Centre. The charity intended that the museum should celebrate Britain's multi-culturalism and would teach the history of immigration into this country, how Britain became a multi- cultural society, and the beliefs of Britain's many faiths. It is supported by the various different faiths which are represented in society today. Looking at the project as a whole, it is clearly attractive and one which would be culturally beneficial. At one time, notwithstanding the decision which they were ultimately to reach, the Commission was very supportive of the project.

3. The Commission is a body corporate established under section 40 of the National Lottery Act 1993. Under section 41 of the Act, the Commission is empowered to make grants to funds or to assist projects that the Commission considers appropriate to mark the beginning of the third millennium.

4. At the relevant time the Commission had a distinguished membership. The Secretary of State had power to give directions to the Commission. On 20 June 1994 he did so, specifying matters which the Commission was required to take into account in awarding grants.

5. Furthermore, upon inviting applications for the fifth round of capital grants which were to be made in 1999, the Commission distributed an application pack detailing criteria and guidelines which the Commission would apply in allocating grants. Those criteria, together with the direction by the Secretary of State set out the framework within which the Commission was required to consider the different applications.

6. However, the criteria are very broad. They give the Commission a wide discretion when considering the application. There were two categories of criteria. First, there are those which have to be fulfilled to establish the eligibility of the application. Then there are the criteria that apply once an applicant has met the eligibility criteria. The Commission has also to evaluate the application against the other competing applications that it was considering. Certain of the criteria (contained in document Annex C) set out how the Commission proposed to assess the projects. They mentioned:

“[A]The degree to which the application will benefit the public good.

[B]Whether the application is mainly for capital expenditure, within the threshold levels indicted.

[C]The extent of partnership contributions to the project.

[D]The long-term viability of the project and the ability of the applicant to secure the long-term running costs of the project.”

The information contained in the pack adequately informed applicants of how the decision-making process was to take place.

7. The Commission held successive competitions for grants. Asha had initially applied to the Commission for a capital grant in the third round. This was favourably received. In December 1998 Asha was awarded a conditional grant of £10 million, and an interim grant of £0.5 million as seed cord funding. However, subsequently the Commission decided that Asha had failed to satisfy the conditions for a conditional grant. This was because the Commission were concerned that the project would not be delivered due to insufficient co-funding and in addition referred to a lack of both viability and public support. The Commission decided to determine the conditional grant and demanded repayment of the funds already paid to Asha.

8. Understandably Asha was disappointed at that decision of the Commission. But the ability and the propriety of the Commission to come to that conclusion is not challenged in these proceedings. However, the Commission informed Asha that there was to be a fifth round of grants which was intended to support capital projects reflecting the achievements and aspirations of the ethnic minority communities of the United Kingdom, and that if Asha applied its application would be considered alongside other applications received. Asha was encouraged by that information from the Commission because their museum project appeared to them to fall within the purpose enunciated by the Commission. Accordingly Asha applied for a grant of £10 million in the fifth round.

9. We are told by Mr Gordon QC, who appears on behalf of Asha in this court, that the costs of preparing the application for the fifth round were substantial. However, there was intense competition for grants on the fifth round. There were twelve applicants. There was no possibility of all the applications being met, if the Commission were to keep to their budget of £19 million for the fifth round. This was obvious if Asha were to be granted their application for £10 million. There was no substantial additional amount available for the fifth round and if Asha was successful it was going to get the lion's share of the money which was available.

10. The Commission came to the conclusion that Asha's application met the eligibility grounds. The application therefore had to be considered on its merits in accordance with the criteria and in competition with the other applicants which were eligible.

11. The Commission informed Asha of its decision by letter dated 28 June 2001. The letter stated:

“I regret to advise you that after careful consideration the Commission did not choose to provide a grant for the Asha Centre project. In the light of the competition, the Commissioners decided that your application was less attractive than others before them. Your application for Round 5 funding has therefore been rejected.

....

I know that the Commissioners' decision will come as a disappointment to you. Should you wish to discuss this letter please contact me at the Millennium Commission.”

12. Asha sought clarification of the reasons behind the Commission's decision. The Treasury Solicitor, acting on behalf of the Commission, wrote a letter dated 27 July 2001. The letter recorded the fact that the Commission had found that Asha was eligible for a grant. However, the fifth round was substantially oversubscribed by applications that were, in terms of the appraisal criteria applied by the Commission, also eligible for grants. The letter also stated that the Commission was made aware that there were significant risks in taking the Asha project forward. The letter stated that the Commission had assessed Asha's application, as required by section 41 and had formed its view as to the comparative merits of each eligible project, taking into account the Commission's key criteria and having regard to the geographical and culture equity of grant distribution. The letter concluded that, against these considerations, the Commission preferred other applications before it to the Asha application.

13. From Asha's point of view the information which was provided as to the basis of the Commission's decision was limited. It was, first, that their application met the eligibility criteria; and secondly, that the other applicants who were successful were preferred to its application. There was also the reference (the significance of which was not clear) to the risk element in regard to the Asha application.

Asha's Contentions

14. Asha's reaction to the information with which they were provided was that they had been given no adequate reasons for the decision. They submit that there was an obligation upon the Commission to give meaningful reasons that would help them to know precisely why their application was not one of the preferred applications. It is said that that obligation arises partly as a matter of general law which requires administrative bodies such as the Commission to give reasons for their decisions in appropriate circumstances; and secondly, because in this case there had been a promise to give reasons which created, so far as Asha were concerned, a legitimate expectation that they would receive adequate reasons.

15. In the application pack under the heading “What happens next?” paragraph 1 refers to the appraisal. It reads:

“Applications received are subject to a detailed appraisal before the Commission makes a decision.”

Under “Offer of grant” it says:

“When the Commission's detailed examination of your 2nd stage application is completed, we will decide whether to make you an offer of grant. If your application is rejected, the Commission will write to you explaining why. Once grant has been offered to projects, a further grant contract will be negotiated. No payment will be against the full project until a grant is signed and any necessary conditions contained therein are fulfilled.”

The second stage which is referred to in that document is the stage of the consideration of applications which occurs after the eligibility issue has been determined. It relates to the hurdle on which Asha failed, namely the Commission's responsibility to make a choice between the different applications or, if appropriate, to reject an application on grounds other than competitive grounds.

The Application for Judicial Review

16. Not being satisfied with the reasons which they had been given for the Commission's decision, Asha made their application to the High Court for judicial review. That came before Lightman J. He gave his judgment on their application on 14 May 2002. The application was made on two grounds: (1) lack of reasons, and (2) misdirection by the Commission.

17. Before us on this appeal, Mr Gordon relies on both grounds, but he took the misdirection ground “at a gallop” because it is interlinked with his contention that no adequate reasons had been given. He submits that without knowing the reasons it is not possible to tell whether or not there has been a misdirection. He points to various documents which, he submits, raise questions as to whether the application has been properly considered.

18. The application for leave to appeal was refused by Lightman J, but was granted by Laws LJ in these terms:

“It may very well be that Lightman J was right, but the nature or quality of reasons to be given by the Commission for a negative decision is not without importance and the appellants' case cannot be said to be fanciful or unarguable.”

I would not disagree with that assessment of the position by Laws LJ. However, despite having heard Mr Gordon's elegant and carefully reasoned argument, I have come to a clear conclusion as to the outcome of this appeal.

19. With regard to misdirection, Lightman J concluded that there was a heavy burden on Asha to make good the contention of the existence of the misdirection; and that the Commission was required to exercise a personal and subjective judgment as to the appropriate projects to be supported, having full and proper regard to the statutory considerations and the Commission's criteria and guidelines. However, the judge came to the conclusion that the Commission should be assumed, in the absence of evidence to the contrary, to have known their duty and to have reflected it in their judgment. He added that this assumption was reinforced by consideration of the material available to the Commission and its lengthy dealings with Asha. He rejected Asha's challenge to the Commission on the grounds of misdirection.

20. With regard to the alternative ground as to the adequacy of reasons, the judge came to the conclusion that, notwithstanding Mr Gordon's suggestion of a promise contained in the material provided by the Commission to Asha, the obligation to give reasons was met by the reasons in fact given, albeit that they were limited.

The Argument in this Appeal

21. In advancing his submissions, Mr Gordon referred us to the cases on which Lightman J relied in the course of his judgment. Of critical importance to the consideration of the issues which are before us is the decision of the Divisional Court in R v Higher Education Funding Council, Ex parte Institute of Dental Surgery [1994] 1 WLR 242. That was a case where the Higher Education Funding Council had the task of assessing the rating to be given to institutions who were seeking research grants from the council. The applicants, who were the Institute of Dental Surgery, complained that they had not received adequate reasons for the decision to give them a grading at level 2, which would have reduced their research grant by approximately a quarter of a million pounds. The application was dismissed. It was held that:

“academic judgments were not in the class of case where the nature and impact of the decision itself required that reasons be given as a routine aspect of procedural fairness but were in a class where some factor would be required to show that in the circumstances of the particular decision, fairness required reasons to be given; that where the decision which was sought to be impugned was on the evidence no more than an informed exercise of academic judgment, fairness alone would not require reasons to be given; that despite the importance of the decision to the applicant, the combination of openness in the run up to the decision with the prescriptively oracular character of the decision itself made the council's allocation of grades inapt for the giving of reasons; and that there was nothing inexplicable about the decision itself, which could not have occurred within a lawfully conducted evaluation, so as to oblige the council to furnish reasons.”

That recital from the headnote indicates that that case has a similarity to this because the exercise which was being formed by the Funding Council was very much in line with the sort of exercise which was being performed by the Commission in this case. Nonetheless there are important differences: first, there was no promise to give reasons in the Higher Education Funding Council case; and secondly, the exercise performed by the Higher Education Funding Council was different from that performed by the Commission because the Higher Education Funding Council in determining the grading for the purposes of research of institutions of higher education did not have to approach the selection from a competitive point of view. They merely had to assess the various institutions that were being considered and then in accordance with their judgment come to a conclusion as to the appropriate level at which to assess the particular research activities of that institution.

22. Here, on the other hand, because of the fact that there were eligible applications for a grant in excess of the budget which was contemplated being expended on the fifth round, the Commission had two tasks to perform, even though a particular application was eligible for a grant. First, the Commission had to decide whether they wanted to make a grant to that particular applicant. It did not follow, merely because it was eligible, that it automatically was entitled to a grant. The second task which the Commission had to perform, if an applicant was one to whom they would have been willing to make a grant, was to see how that application compared with other applications which were eligible for grant. This was particularly important in the case of Asha because its success would have an adverse effect upon the other applications. Asha, despite the size of its application for grant, was entitled to be properly considered in competition with other applicants which were before the Commission.

23. Setting aside the promise to give reasons which was contained in the application pack, it seems to me that there was no more obligation upon the Commission than to do what they did, which was to say that they preferred the other applications over and above that of Asha and that in those circumstances Asha must regrettably be declined. But Mr Gordon, rightly in my judgment, attaches particular importance to the promise which was made. The case turns on the consequence of that promise.

24. Before turning to the judgment of Sedley J in Ex party Institute of Dental Surgery, it is convenient to identify the following general propositions. First, in the case of a decision of the sort that the Commission was making, as a matter of good administration and fairness the body concerned should give such reasons as are appropriate and reasonable in the circumstances. This should be done: (a) because the obligation to give reasons causes a decision-making body properly to focus its mind on the task before it; (b) the exercise of giving reasons causes the body to consider in turn the relevant considerations. A second reason why it is important is connected with the first reasons. When a decision as significant as this is made by the Commission for a body such as Asha, it is important that that body should have a reasonable and practicable opportunity to satisfy itself that the decision has been properly taken. If it has not been properly taken, the body should be in a position to come before the court and ask for the decision to be set aside or amended. However, that does not mean that in every case there is a duty to give detailed reasons. As was said by Lightman J, it all depends on the circumstances as the circumstances are always important.

25. In the course of his judgment in Ex parte Institute of Dental Surgery, Sedley J reviewed the obligations to give reasons. He referred to a number of relevant authorities, including R v Civil Service Appeal Board, Ex parte Cunningham [1992] 1 CR 816, [1991] 4 All ER 310 CA, and R v Secretary of State for the Home Department, Ex parte Doody [1993] 3 WLR 154, [1993] All ER 92, HL(E). I do not think that it would be helpful to go through what was said in those well-known cases. However, at page 256 of the judgment Sedley J said:

“It follows nonetheless from Lord Mustill's reasoning that the 'more familiar route' exemplified by Ex parte Cunningham [1992] 1 CR 816 may be broader than the Cunningham situation alone and capable of embracing other situations in which 'it is important that there should be an effective means of detecting the kind of error which would entitle the court to intervene.' This being so, it seems both desirable and practical to test by a common standard both the fairness of not telling a person the reasons for a decision affecting him and the desirability of exposing any grounds of legal challenge. There are, moreover, reasons of principle for a unitary test. As the judgments in Ex parte Cunningham show, one aspect of unfairness may be precisely the inability to know whether an error of law or of process has occurred. But since the latter is not a freestanding ground for requiring reasons (for if it were, it would apply universally), it can only be on grounds of fairness that it will arise; so that the need to know whether there has been an error of law or of process is rightly seen not as an alternative to the demands of fairness but as an aspect of them. This approach places on an even footing the multiple grounds on which the giving of reasons may in any one case be requisite. The giving of reasons may among other things concentrate the decision-maker's mind on the right questions; demonstrate to the recipient that this is so; show that the issues have been conscientiously addressed and how the result has been reached; or alternatively alert the recipient to a justiciable flaw in the process. On the other side of the argument, it may place an undue burden on decision-makers; demand an appearance of unanimity where there is diversity; call for the articulation of sometimes inexpressible value judgments; and offer an invitation to the captious to comb the reasons for previously unsuspected grounds of challenge. It is the relationship of these and other material considerations to the nature of the particular decision which will determine whether or not fairness demands reasons.”

In the first part of that passage Sedley J expresses eloquently the benefits of reasons being required. The second part of that statement, dealing with “the other side of the argument” makes a point which in my judgment is highly material to the present appeal.

26. Whether a requirement for more than was done by the Commission in this case would have the effects to which Sedley J refers in the second part of the statement is a question to which this court must pay attention. Mr Gordon, however, rightly points out that that passage from Sedley J's judgment dealt with a situation where the issue was whether or not there was an obligation to give reasons and not the content of the reasons required. It did not deal with the issue which directly arises on this appeal because, first, this is a case where it is accepted that there was an obligation to give reasons; and secondly, because the application pack contained a promise in express terms that reasons would be given.

27. However, although it is often convenient to divide the obligations to give reasons into two stages -- the first stage being to decide whether or not any reasons are required as a matter of law; and the second stage being to inquire into the content of the reasons to be given if there is an obligation to give reasons -- in many situations it is difficult to make a distinction between the two situations. Where the obligation to give reasons exists, this does not require a single standard of reasons to be given. The standard of reasons required depends upon the circumstances of the particular case. Where reasons are required to be given, the obligation is to give appropriate reasons having regard to the circumstances of the case. The second situation which Sedley J described and the approach to which he there referred, in my judgment, applies not only to the question whether there is an obligation to give reasons, but also to determining the quality of reasons required to be given.

28. One of the issues that the Commission had to decide in this case was the question of eligibility. If the Commission had concluded that the application fell down because it did not meet the eligibility criteria, then in my judgment it would be necessary for the Commission to point out in their decision why the application did not comply with the eligibility criteria. However, when considering the question of whether or not to grant an application which is eligible, differing situations can exist. There may be situations where the Commission conclude: “We reject the application, although it is eligible, on a particular ground.” If that is the basis for the decision, then the Commission must say what the particular ground is. Certainly this is the case if they choose to make a promise, as was made in this case.

29. But there are other kinds of decisions of the Commission where a realistic assessment of what is appropriate dictates a different conclusion. When the Commission is engaged in assessing the qualities of the different applications which were before them in competition with each other, the difficulties which would be involved in giving detailed reasons become clear. First, the preference for a particular application may not be the same in the case of each commissioner. Secondly, in order to evaluate any reasons that are given for preferring one application to another, the full nature and detail of both applications has to be known. If the Commission were to be required to do what Mr Gordon submits was their obligation here, the Commission would have had to set out in detail each commissioner's views in relation to each of the applications and to provide the background material to Asha so that they could assess whether those conclusions were appropriate. This would be an undue burden upon any commission. It would make their task almost impossible. It certainly would be in my judgment impracticable as a matter of good administration.

30. Although I fully sympathise with the concerns of Asha, to learn more than that one application is preferred to this particular application is all that can be required of a body such as the Commission when it makes a decision of this sort. If ground for decision of the Commission is that in their view one application is less satisfactory than the others that succeed, it does not seem to me that more can be done than was done here. That therefore in my view deals with the principal grounds of this appeal.

31. I have not referred to the remainder of Sedley J's judgment. The judgment as a whole was relied upon by Mr Gordon, but the help that I find in the passage to which I have already referred was referred to again by Sedley J at the end of his judgment when he said:

“Here fairness may require reasons so that the recipient may know whether the aberration is in the legal sense real (and so challengeable) or apparent; (b) it follows that this class [the Higher Education Funding Council] does not include decisions which are themselves challengeable by reference only to the reasons for them. A pure exercise of academic judgment is such a decision.”

32. Here the Commission exercised their judgment. It was not an academic judgment; it was a similar but more difficult judgment to make than that of the Higher Education Funding Council. This is because the Commission were required to make a selection from the eligible applications.

33. In his reasoning Sedley J pointed to the fact that there may be special circumstances in a particular case why reasons are required because the decision is otherwise inexplicable. That special situation does not apply in the circumstances which are before us.

34. Mr Gordon submitted that the promise made by the Commission in the application pack puts this case in the same sort of special category because the promise “triggered” a requirement to give reasons over and above what would otherwise be required. I do not accept that submission. I consider that the promise was no more, and should be understood to be no more, than to give reasons which would be appropriate in the circumstances. As I have already explained this does not in my view require the Commission to do more than, first, to make it clear that they regarded the application as eligible (which was done at the first stage), and secondly, to say that on the basis of a collective decision the application of Asha was trumped by the other applications which were preferred.

35. The conclusion to which I have come as to reasons in my view deals with the argument upon which Mr Gordon relied as his second ground on this appeal, namely that the Commission had misdirected themselves. If no more reasons are required than were given, then in my view there is noting in the material which we have been shown which would indicate that the Commission had not done that which was required of them, namely to apply to their decision the special criteria. Accordingly, I would dismiss this appeal.

36. LADY JUSTICE HALE: I agree, and my reasons for doing so are so nearly identical to those given by my Lord that it is neither necessary nor appropriate for me to say anything more.

37. LORD JUSTICE LATHAM: I agree.

ORDER: Appeal dismissed with costs; leave to appeal refused.