Piffs Elm Limited, R (on the application of) v Commission for Local Administration in England & Anor.

The Appellant, Piffs Elm Limited (‘Piffs Elm’) appeals, with the leave of Singh LJ, against an order made by Heather Williams J on 22 June 2022. The appeal is resisted by the Local Government Ombudsman (‘the Ombudsman’) and by Tewkesbury Borough Council (‘the Council’). The broad issues are whether the Ombudsman had power to withdraw a final report issued in August 2019, and if so, on what grounds, and if not, whether that final report was unlawful, and, if so, whether a second report which the Ombudsman issued in the Council’s favour in February 2021 was unlawful or not.

On this appeal Piffs Elm was represented by Mr Hunter, the Ombudsman by Mr Coppel KC, and the Council by Mr Pereira KC and Mr Waller. Messrs Pereira and Waller did not appear at the hearing, in order to save costs. I thank the first two counsel for their written and oral submissions and the last two for their written submissions.

In this judgment I will use the following definitions.

Paragraph references are to judgment 2, or to decision 1, or decision 3, as the case may be, unless I am referring to an authority. For convenience, I will use the pronoun ‘he’ when referring to the Ombudsman.

For the reasons given in this judgment I have reached three conclusions, which are subject to the reservations which I express in paragraphs 90, and 91, below.

I have taken this outline from judgment 2, and from the terms of decision 1 and of decision 3.

In October 2015, Piffs Elm applied for planning permission for an industrial development (‘application 1’). On 16 February 2016, the Council refused application 1 (‘refusal 1’). Piffs Elm then made a second similar application (‘application 2’). The Council refused application 2 on 18 May 2016 (‘refusal 2’). Piffs Elm then applied for judicial review of refusal 2. JR1 was listed for a ‘rolled-up’ hearing on 4 November 2016. In the meantime, Piffs Elm made a third application for planning permission (‘application 3’), asking for a waiver of the application fee. The Council refused the application for a waiver (‘refusal 3’). The Council drew the attention of Piffs Elm to section 70A of the Town and Country Planning Act 1990 (‘the 1990 Act’) (see further, paragraph 86 below), saying that section 70A would be engaged if application 3 were submitted with a payment, and advising Piffs Elm to reconsider its position. Piffs Elm nevertheless paid a fee of £41,244 (‘the Fee’).

Judge 2 recorded a statement (in a letter dated 25 June 2019 from the Council to the Ombudsman) that an officer from the Council rang Piffs Elm’s planning agent after the Council had received the Fee, and told him that if the Council validated application 3, and then decided to refuse it, the Fee would be forfeited. Judge 2 made no finding of fact about this. In a letter dated 14 July 2016, the Council refused to decide application 3 on the ground that Piffs Elm had made more than one similar application and had not appealed to the Secretary of State against the decisions refusing those applications. Piffs Elm did not challenge this refusal, which I will refer to as ‘the section 70A decision’. Judge 1 heard JR1 in November 2016. He decided that there was an appearance of bias in refusal 2. He did not quash refusal 2, on the ground that Piffs Elm had had, and had not used, a suitable alternative remedy (that is, an appeal to the Secretary of State for which the time limit had not expired). Mr Coppel told us in the hearing that Piffs Elm had, at that stage, still had 17 days in which to appeal.

On 14 November 2016, Piffs Elm’s solicitors wrote to the Council. They drew attention to the judgment of Judge 1. They asked the Council to ‘confirm’ what steps they would take in the light of Judge 1’s judgment and how they would exercise their discretion to refund the Fee. The Council replied on 18 November 2016. The Council disagreed with the inferences which Piffs Elm had drawn, but said that it was inappropriate to comment without a copy of Judge 1’s order and a transcript of his judgment.

On 24 November 2016 the Council replied substantively, despite the fact that the Council had still not received a transcript of Judge 1’s judgment. I will refer to this as ‘refusal 4’. Inexplicably, refusal 4 was not in the documents which were before Judge 2. It was not provided to us until we asked for it during the hearing. Counsel told us, however, that it was among the documents which Piffs Elm sent to the Ombudsman when, in due course, Piffs Elm made the Complaint. The letter of 24 November said that the case turned on the appearance of bias, not actual bias. There had been no abuse of power, and it was not an exceptional case in which a planning appeal should not be pursued. The Council then made three points.

Piffs Elm then made a formal complaint to the Council, under stage 1 of the Council’s complaints scheme. The Council rejected the complaint in an email dated 11 January 2017. The Council explained that the complaint related to the outcome of JR1. The Council did not consider that there was any actual or apparent bias, as it had followed its procedures, although Judge 1 had held that the decision was tainted by apparent bias. The Council did not agree with his analysis. Judge 1 had found there was no abuse of power, and refused relief because there was a suitable alternative remedy. Piffs Elm had been professionally represented but had not appealed. Piffs Elm could have appealed within the statutory time limit. The Fee had to be paid for application 3 to be validated, and Piffs Elm had been advised of the risks in respect of the decision and of the Fee. In paragraph 29 (see paragraph 47, below), Judge 2 considered how that email should be understood.

Piffs Elm made a stage 2 complaint in a letter dated 12 January 2017. The Council rejected that complaint in an email dated 17 March 2017. There was no justification for reimbursing the Fee. Piffs Elm had not appealed to the Secretary of State against the refusals of applications 1 and 2, had not applied for judicial review of the section 70A decision, and had made application 3 despite advice that application 3 might fail and the Fee might not be refunded. The Council told Piffs Elm that this was the last stage of the complaints process but that Piffs Elm could contact the Ombudsman.

On 2 June 2017 Piffs Elm’s solicitors made a complaint of maladministration to the Ombudsman, which I refer to as ‘the Complaint’. Piffs Elm’s solicitors said that the only alternative remedy in respect of the section 70A decision and refusal 4 was an application for judicial review and that no such application had been made. They said that refusal 4 was ‘Wednesbury unreasonable’. That was ‘made even more objectionable by reference to the individual circumstances of this case’. The solicitors referred to refusals 1 and 2 and to the section 70A decision. They said that the High Court had decided that refusal 2 was unlawful. That was relevant, as the premise of the section 70A decision and of refusal 4 was that similar applications for planning permission had been refused more than once; but refusal 2 was unlawful. The section 70A decision was ‘Wednesbury unreasonable’. Refusal 4 was unlawful. The Council’s stage 1 response was said to contain ‘a clear misrepresentation’ of Judge 1’s judgment and was ‘fundamentally flawed’. The Council’s refusal to accept Judge 1’s criticisms indicated serious maladministration.

The Ombudsman issued five draft reports (‘drafts 1-5’) before finalising the report which contained decision 1. The parties were given a chance to comment on each. Each draft elicited comments from one or other of the parties and/or threats to apply for judicial review.

The Ombudsman’s initial response in draft 1 was that he proposed to discontinue the investigation because the case involved ‘difficult and contentious legal issues’ which were best resolved by the courts. Piffs Elm’s solicitors then narrowed the scope of the Complaint. They said that the Ombudsman did not need to consider whether refusals 1 and 2 were null and void. That would only be an issue if the Complaint was that the section 70A decision was unlawful. The Complaint simply related to whether or not refusal 4 was unreasonable in the light of Judge 1’s finding that refusal 2 was unlawful (judgment 2, paragraphs 38 and 39).

This led the Ombudsman to change his position in draft 2. He said he would investigate refusal 4 because it was not ‘inextricably linked to’ the section 70A decision. It was reasonable for Piffs Elm not to pursue a legal remedy because refusal 4 turned on compliance with planning guidance (‘the Guidance’), rather than a strict question of law. The Ombudsman said that the Council were at fault in not returning the Fee because this was contrary to requirements which were implied in the Guidance. The Fee should be refunded and the Council should apologise. In draft 2 and the drafts which followed, the Ombudsman maintained his view that he would not investigate the section 70A decision. In draft 2 he said he was exercising his discretion under section 26(6)(c) of the Local Government Act 1974 (‘the LGA’) (see paragraph 80, below) to discontinue that aspect of his investigation. The reason he gave was that this issue could not be decided without a judicial determination of the question whether the Council’s ‘previous planning decisions’ were lawful.

In a letter dated 31 May 2018, the Council, in short, attacked the Ombudsman’s reasoning in support of the view that the Council had acted unlawfully in not refunding the Fee. The Council attached a short advice from Mr Pereira QC (as he then was), dated 8 May 2018, confirming the position stated in the letter of 31 May, which he had helped to settle. The Council also made representations which persuaded the Ombudsman that he could not ‘disentangle’ the issues in the way he proposed. The Ombudsman would have needed to consider the legal status of refusals 1 and 2, and Piffs Elm’s challenge to refusal 4 was largely based on the findings of Judge 1. The Ombudsman would have to decide the legal status of refusals 1 and 2, and he could not do that.

In draft 3, the Ombudsman therefore said that he would discontinue the entire investigation in the exercise of the discretion conferred by section 24A(6) of the LGA.

Piffs Elm’s solicitors continued to try to persuade the Ombudsman that he could investigate refusal 4. They further clarified the Complaint in letters dated 28 September and 3 December 2018. The first letter said that the Complaint was not about refusals 1 or 2 or the section 70A decision. There was no need to make any decision about whether or not the section 70A decision was lawful. The Council had simply been unreasonable in refusing to refund the Fee ‘after the High Court judgment’ when that showed that application 2 had not been fairly dealt with. The second letter was in similar terms.

In draft 4, the Ombudsman drew a distinction, which he repeated in draft 5, between the Council’s failure to consider whether or not to exercise their discretion to refund the Fee, which he did investigate, and the other points which had been made. As a result of Piffs Elm’s clarification of the scope of the Complaint, the Ombudsman was ‘now only investigating the administrative actions of [the Council] in relation to the retention of the [Fee]’. The Ombudsman had not investigated the Council’s actions ‘in the context of [applications 1 and 2]’. The refusal to make the refund was ‘a standalone administrative action’. The Ombudsman’s provisional view was that the Council had a discretion to refund the Fee which they had not considered exercising in this case.

The Council continued to maintain, in their response dated 6 March 2019, that they did not have a discretion to refund the Fee. The Council referred again to an advice to that effect from Mr Pereira. The Council accepted that they had not considered the exercise of their discretion to refund the Fee after application 3 was made. However the Council had been asked to waive the Fee when Piffs Elm made application 3 and did consider whether there was a justification for that. Whether or not the Council had a power to refund the Fee, they had a power to waive the Fee. The Council had considered whether or not to exercise that discretion. In that situation, it would have been lawful, and would not have been maladministration, if the Council had refused to consider refunding the Fee after Piffs Elm made application 3. There was ‘no conceivable basis on which the Council having decided not to waive the [Fee] pre-application, should nevertheless decide to refund the [Fee] post-application’.

Draft 5 was in ‘materially the same terms as draft 4’ (judgment 2, paragraph 46).

The final version of the report containing decision 1 was dated 22 August 2019. The report summary identified the complainants as ‘Mr and Mrs Y’ rather than as ‘Piffs Elm’, which is a limited company. The Ombudsman described the Complaint as a complaint about the Council’s ‘decision to retain a planning application Fee after the Council used its powers to decline to determine their planning application’. The Ombudsman ‘found fault with the Council because it did not consider exercising its discretion to refund the Fee. The Council should now consider whether it intends to exercise its discretion to refund the Fee’. The ‘finding’ was described as ‘Fault found causing injustice and recommendation made’. The recommendation echoed the description of the finding. In the introduction, the Ombudsman explained that he used the word ‘fault’ to indicate maladministration and that the word ‘injustice’ referred to any adverse impact on the complainant.

The Ombudsman described the Complaint in more detail in paragraph 1, by adding that refusal 4 was said to be ‘unreasonable’ given [Judge 1’s] findings about their previous ‘planning applications’. The Ombudsman had not investigated ‘the reasonableness of the Council’s actions in the context of the judicial review, and any previous planning decisions’ for reasons given at the end of the report. In pages 4-5, the Ombudsman referred to section 70A of the 1990 Act (see paragraph 86 below), to the relevant guidance and to the Town and Country Planning (Fees for Applications, Deemed Applications, Request and Site Visits) (England) Regulations 2012 (‘the Regulations’). The Ombudsman noted that neither the Regulations nor the Guidance imposed a duty on the Council to refund the Fee in this case, or gave the Council any power to do so. Paragraph 15 suggests that the Ombudsman considered that the Council might, nevertheless, have an implied power to refund the Fee. That suggestion is not explained. In paragraphs 19-28, the Ombudsman made some findings of fact about the history. His conclusions were in paragraphs 29-40.

The Ombudsman said that in a previous draft, he had proposed not to investigate the Complaint about the retention of the Fee because he considered that the Complaint was ‘inextricably linked to the status of the two previous planning decisions; a matter which we cannot determine’ (paragraph 29). The complainants had ‘re-confirmed the scope of their complaint’. The Ombudsman referred back to paragraph 1. He was now ‘only investigating the administrative actions of the Council in relation to the retention of [the Fee]’. He had not investigated the Council’s ‘actions in the context of’ applications 1 and 2.

When considering those ‘administrative actions’ the Ombudsman had considered the ‘law and guidance’. He considered that the Council has a ‘general discretion to make refunds if it is appropriate to do so’ (paragraphs 31, 34, 35 and 40). He rejected the Council’s argument to the contrary (paragraph 32). The Ombudsman recorded the Council’s argument that this was a matter of interpretation, the Council’s interpretation was not wrong, and the Council were not at fault (paragraph 33). The Council had, in response to the draft decision, ‘confirmed that it did not give any thought to the exercise of its discretion because it maintains that the only option it had was to apply the statutory fee scale’ (paragraph 34). The Ombudsman considered that ‘if there is no such discretion…we would expect to see this made clear in legislation’. He referred to two cases in which councils ‘have used their discretion to make refunds after declining to determine a planning application’. The facts of the cases were different, but the councils had made refunds. ‘It therefore follows that there must be discretion …to refund planning application fees if it is appropriate to do so’ (paragraph 36).

The Ombudsman ‘found fault with’ the Council ‘for failing to consider its discretion to refund [the Fee]… The fault has caused injustice to Mr and Mrs Y because there is uncertainty as to whether they would have received a refund, had the Council considered its discretion’. In paragraph 38, the Ombudsman described the Council’s response to his request that they consider whether or not to make a refund. The Council’s response to the draft decision was that they would not comply with the recommendation. They considered that they would be vulnerable to an application for judicial review if they complied with the recommendation (paragraph 38).

The Ombudsman did not refer in decision 1 to the Council’s actual response to the application for a refund, the letter of 24 November 2016 (see paragraph 10, above). Indeed, in paragraph 39, he referred to the Council’s response to the request for a pre-application waiver of the Fee, and said ‘Although the Council considered Mr and Mrs Y’s request to waive [the Fee] before it was paid, there is no evidence to show that it gave any thought to the exercise of its discretion once Mr and Mrs Y paid the fee and requested a refund’. He referred to the Council’s response to the stage 1 and stage 2 complaints instead of to the Council’s letter of 24 November 2016. I have already mentioned that counsel told us during the hearing that that letter was attached to A’s Complaint. In paragraph 40 the Ombudsman repeated his conclusion that the Council had ‘a general discretion to refund [the Fee]…and not doing so was fault’. He set out his recommendations in paragraphs 41 and 42. He explained in paragraph 46 that he had considered ‘the issue of the refund as a standalone administrative action’ and had not reached a view on ‘the reasonableness of the Council’s actions in the context of the first two planning applications because our jurisdiction prevents us from determining the legal status of those applications’.

On 28 October 2019 the Council sent a pre-action protocol letter to the Ombudsman challenging decision 1. Either the Council had no power to refund the Fee, or the position was so uncertain that refusal 4 could not amount to maladministration.

The Ombudsman then took legal advice and decided that decision 1 was ‘legally flawed’. He wrote to Piffs Elm and to the Council on 14 November 2019 saying that he intended to re-open the investigation, withdraw decision 1 and issue a further report. This was decision 2. Piffs Elm’s response was that he had no power to do that. The Ombudsman’s reply was that decision 2 was based on the Council’s representations and on legal advice. He considered that he had made a public law error in decision 1.

On 17 January 2020, the Ombudsman issued the first draft of decision 3. His provisional view was that the Council had not been at fault. Independent legal advice confirmed that there were ‘respectable legal arguments’ that the Council did not have a discretion to refund the Fee. The Ombudsman could not decide legal disputes and there was no good reason why Piffs Elm had not litigated that issue. He continued to consider that the scope of the Complaint was as he had described it in decision 1.

The Ombudsman issued the report containing decision 3 in February 2021. The summary of the report was that Mr and Mrs Y complained about the Council’s decision ‘to retain a planning application fee after the Council used its powers to decline to determine their planning application’. By contrast with the summary in decision 1, the Ombudsman then set out the Council’s position, which what that they had no discretion to refund the Fee. His conclusion was that the Council had not ‘acted with fault’.

Paragraph 1 described the Complaint in the same way as paragraph 1 of decision 1. Paragraph 2 was the same as paragraph 2 of decision 1. The Ombudsman’s description of his role and powers (paragraphs 3-8) differed somewhat from, and was fuller than, the equivalent description in decision 1. In particular, in paragraph 7, he referred to R (Rapp) v Parliamentary and Health Services Ombudsman [2015] EWHC 1344 (Admin) (‘Rapp’) as authority for the proposition that he has no duty to decide questions of law and is not a surrogate for the court in deciding whether or not there has been unlawful conduct.

The analysis of the law about section 70A and about the refund of planning application fees was aligned with the position set out by the Council in correspondence with the Ombudsman. He maintained that the Regulations and Guidance were silent on the circumstances in which there is a power to refund a fee (paragraph 17).

The Ombudsman’s findings were in paragraphs 21-30. They were the same as the findings in decision 1. The conclusions were in paragraphs 31-43. In paragraph 31, he referred to an earlier draft in which he had proposed not to investigate the Complaint because it was ‘inextricably linked to’ the status of the applications 1 and 2. Mr and Mrs Y had then limited the Complaint to the allegation described in paragraph 1 of decision 3. He was now only investigating the ‘administrative actions’ of the Council in retaining the Fee. He had not investigated the Council’s actions in connection with applications 1 and 2. There was an argument that councils had a general discretion to make refunds where it is appropriate to do so. The Council’s position was that this was ‘a matter of interpretation’ and did not disclose ‘fault’ (paragraph 34).

Mr and Mrs Y argued that the Council had not relied on the absence of a power to make a refund as a reason for refusing the refund. The Council had ‘taken legal advice on the point and reached a view that it has no such discretion. Our view is that no un-remedied injustice has been suffered as a result of that limited allegation’ (paragraph 35). The three relevant cases did not decide the legal question (paragraph 36).

In paragraph 37, the Ombudsman referred to further arguments by Mr and Mrs Y, based on ‘section 11’ [sic: I think section 111 must be meant] of the Local Government Act 1972 (‘the 1972 Act’); section 92 of the Local Government Act 2000 (‘the 2000 Act’) and section 1 of the Localism Act 2011 (‘the 2011 Act’). He had considered those arguments. Those powers were ‘not absolutely determinative’ (paragraph 38). There was a legal dispute between the Council and the complainants. There were respectable legal arguments on both sides. It was not his role to decide legal disputes. There is a difference between fault and conduct which may be wrong in law. ‘It is not fault merely for the Council to have got the law wrong providing there are reasonable arguments for it having adopted the position that it did, which in our view there are’ (paragraph 39).

In paragraph 40, the Ombudsman noted that Piffs Elm had made application 3 despite having been advised to appeal refusal 2, and despite being warned that it might be a duplicate application and would not be determined. He decided that he could not make a finding of fault because independent legal advice supported the Council’s view that they did not have power to refund the Fee in the circumstances (paragraph 41).

The uncertainty about the legal position had three consequences in the Ombudsman’s view (paragraph 42).

In paragraph 43, the Ombudsman said that it was not clear that the Council had a discretion to refund the fee. ‘Given the ambiguity’ the Ombudsman could not say that the Council’s ‘position that it has no discretion to refund [the Fee], having considered the question of whether such discretion exists, amounts to fault’. He added that he could not ‘determine legal matters and there is no good reason why the complainants cannot take the matter to court for a definitive determination’. The Ombudsman then summarised his ‘Decision’ thus: he had ‘completed his investigation with a finding of no fault for the reasons explained in this report’ (paragraph 45). In paragraphs 46-48 he described what he had decided not to investigate. He reminded himself that Mr and Mrs Y had confirmed that ‘the sole question for consideration by the Ombudsman is whether it was reasonable for the Council to refuse to refund the [Fee] given [Judge 1’s] findings’ (paragraph 47). The Ombudsman had not reached a view on the reasonableness of the Council’s actions in the context of applications 1 and 2 because his ‘jurisdiction prevents’ him ‘from determining the legal status of those applications’ (paragraph 48).

Judge 2 was considering two applications for judicial review. In JR2, Piffs Elm had originally applied for judicial review of decisions 1 and 2. Piffs Elm was later given permission to amend the claim in order to challenge decision 3. In JR3 the Council challenged decision 1. JR3 was only necessary if and to the extent that decision 2 was unlawful, and did not effectively withdraw decision 1. In paragraph 5, Judge 2 listed the issues raised by JR2 and JR3 in relation to each of decisions 1, 2 and 3.

Three of the issues raised by the challenges to decision 1 concerned whether the Council had a discretion to refund the Fee, and, if so the nature of the discretion and whether it would have been irrational for the Council to refund the Fee on the facts. The fourth, raised by Piffs Elm, was whether the Ombudsman erred in law in deciding that he did not have jurisdiction to decide that part of Piffs Elm’s Complaint which related to section 70A.

The challenge to decision 2 raised one issue: whether the Ombudsman had power to withdraw decision 1, re-open the investigation and issue decision 3.

The challenge to decision 3 raised three issues.

Judge 2 said that she would consider, first, whether or not the Ombudsman had power to withdraw decision 1 (or, in other words, whether decision 2 was lawful). If he had such a power, the question was whether decision 3 was lawful.

In paragraphs 7-12 she considered the legislative framework, and in paragraphs 13-22, the authorities to which she had been referred. She summarised the material facts in paragraphs 23-60.

Judge 2 recorded (paragraph 29) that the parties offered different interpretations of the email of 11 January 2017 (see paragraph 11, above). She considered that the Council had given several reasons for not refunding the Fee. She also considered that while the Council had said that it did not agree with the analysis of Judge 1 ‘this appears to me to have been included more by way of narrative comment, than as an assertion that the Fee would not be returned because the Council thought [Judge 1’s] conclusion was wrong’. She noted that her interpretation of the stage 1 decision was supported by the reasons which the Council gave for rejecting Piffs Elm’s stage 2 complaint (paragraph 30).

Judge 2 observed of the Complaint as first made that, at that stage, it was clear that Piffs Elm’s complaint related both to the section 70A decision and to refusal 4. Judge 2 described the financial remedy sought by Piffs Elm in paragraph 34. The Council responded on 6 November 2017. The Council said that Piffs Elm had an alternative remedy (judicial review) and that the Council did not have power to refund the Fee. In paragraphs 36-46 she described ‘the development of certain strands in the Ombudsman’s thinking and also of the clarification…as to the scope of the complaint’.

Judge 2’s summary of decision 1 was that the Council were at fault in not considering whether or not to exercise a discretion to refund the Fee. The Ombudsman considered that the Council had a discretion to refund the Fee and were at fault for failing, as they had admitted, to consider exercising the discretion. That failure had caused injustice. The Ombudsman disagreed with the Council’s view about the existence of the discretion. The legislation was not clear about that, and the Ombudsman knew of two cases, which he cited, in which local planning authorities (‘LPAs’) had refunded fees. The fault had caused injustice because it was uncertain whether or not Piffs Elm would have received a refund if the Council had considered the exercise of the discretion. The Ombudsman recommended that the Council should review the case within four weeks, consider whether they intended to exercise their discretion to refund the Fee and confirm within three months what action they proposed to take.

Judge 2 commented (paragraph 50) that the Ombudsman had not made the position as clear as he could have done. It seemed to her that his reasoning about the scope of his investigation was based on a perceived exercise of the power conferred by section 24A(6), rather than an application of section 26(6)(c). Draft 2 was the only draft which referred to section 26(6). The final report referred to section 24A(6) ‘in terms that were consistent with the decision as to scope which [decision 1] went on to explain.’ The Ombudsman appeared to have decided that part of the Complaint ‘could be investigated as a standalone complaint about administrative action, whereas part of it could not be investigated because it entailed a resolution of legal issues’ which it was for the court to decide.

Judge 2 summarised decision 3 in paragraphs 55-60. The Ombudsman considered Piffs Elm’s argument that refusal 4 was not, at the time, based on a contention by the Council that they had no power to refund the Fee. He did not consider that this should prevent him from taking into account the argument that the Council had no such power. His view in paragraph 35 was that ‘no unremedied injustice has been suffered as a result of that limited allegation’. Judge 2 said that that phrasing was rather clumsy, but she understood it to mean that if a failure to refund the Fee could not amount to maladministration, for the reasons given by the Ombudsman, then no injustice could follow from the failure to refund the Fee.

In paragraphs 61-95 Judge 2 considered, against the background of her summary of the arguments and the legal principles about the doctrine of functus officio, first, whether there were any errors of law in decision 1 and second, whether the Ombudsman had power to withdraw decision 1. Piffs Elm argued that there was no power to withdraw decision 1, whereas the Ombudsman argued that there was, at least if there was a compelling reason to do so, ‘including where he…reasonably forms the view that the conclusion reached was legally flawed’. The Ombudsman relied on section 12(1) of the Interpretation Act 1978 (‘the 1978 Act’). It applied as there was nothing to indicate a contrary intention. It would be time-consuming and expensive to require an application for judicial review to be made before the Ombudsman could withdraw a legally flawed report. This would not cause injustice as an application for judicial review of the further decision could be made.

Judge 2 referred to exceptions to the functus officio principle which had been recognised in paragraph 3 of R (Sambotin) v Brent London Borough Council [2018] EWCA Civ 1826; [2019] PTSR 371 (paragraph 64). She accepted that the Ombudsman had no express statutory power to revoke a section 30(1) report. The question was whether a statutory power could be implied (paragraph 65). She noted, in paragraph 68, that cases from other statutory contexts were of limited use in this different context. The ‘factors that proved to be influential’ in the cases might be of some help, nevertheless. She listed nine such factors in paragraph 74.

In paragraphs 75-81 she considered the Ombudsman’s argument that he was justified in withdrawing decision 1 and re-making it because he ‘reasonably considered that he had erred in law in’ decision 1. The Ombudsman relied on three errors of law: first, the section 26(6)(c) bar applied to all the issues raised by Piffs Elm with the consequence that he should not have investigated the Complaint or made a decision about it; second, his approach ignored the principle that making a mistake about the law was not, of itself, maladministration; and/or, third, he wrongly treated the two cases to which he referred in decision 1 as authority for the proposition that the Council had power to refund the Fee.

Judge 2 did not accept the first argument. She explained why in paragraph 80. Her view was that the Ombudsman thought he was exercising his powers under section 24A(6), not section 26(6)(c). That did not entail ‘an apparent error of law’. Nor did she believe that he thought at the material time that he had made an error in not applying section 26(6)(c). That view was confirmed by the documents in JR3. She accepted, however, that he ‘reasonably believed’ that decision 1 was flawed for the second and third reasons (paragraphs 76-78).

Judge 2 then considered (paragraphs 82-95) whether the Ombudsman had power to withdraw decision 1. In paragraph 82 she said that section 12(1) of the 1978 Act could apply here, subject to a ‘contrary intention’. She did not think that it mattered that sections 24A(6) and section 30(1) did not confer an express power to withdraw a decision: ‘…if there was an express power to revoke’ in either provision ‘there would be no need to imply a power to do so or to rely on’ the 1978 Act ‘at all’. Those provisions expressly conferred powers to investigate and to issue a report once the investigation was completed. If there was no contrary intention, ‘the effect of section 12(1) is that these powers may be exercised on more than one occasion…Revocation of an earlier decision is simply a concomitant of a power to re-make it’. Section 12 was wide enough to imply a power to revoke and re-take a decision.

She then considered whether there was a ‘contrary intention’. She made it clear that she only intended to decide whether there was a power to withdraw a decision made under section 30(1) if the Ombudsman reasonably believed it to be legally flawed. She would not decide whether there was a wider power to withdraw decisions made under section 30(1) (paragraph 83).

She rejected Piffs Elm’s submission that the LGA was a complete code which could not be construed as conferring additional, implied, powers. The LGA conferred broad discretions on the Ombudsman. The procedure was informal. The Ombudsman had operated a review process for 20 years. If Piffs Elm was right, the review would be ultra vires ‘a proposition which appears less than desirable’ (paragraph 84). She took four aspects of the statutory scheme into account in deciding that there was an implied power to withdraw a ‘final’ report and ‘re-make the decision (with such further investigation as may be necessary)’. They included that the LGA was silent about any power of review, that the Ombudsman does not decide legal rights, and that he continued to have statutory functions after issuing a report under section 30(1) (paragraph 85). The terms of the LGA pointed against Piffs Elm’s submission. Given section 12(1), the lack of an express power to withdraw a report or to re-open an investigation did not matter. The word ‘completes’ was neutral. The detailed and prescriptive nature of the provisions in section 31 which apply after a report is issued shed no light on whether the report could be withdrawn and re-issued (paragraph 86).

A power to withdraw a decision which the Ombudsman reasonably considered to be legally flawed did not undermine the statutory scheme. It would not undermine finality and would be procedurally less cumbersome and quicker and cheaper than the alternative. The power for which he argued was close to exceptions to the functus officio principle which have already been recognised and to which she had referred in paragraph 64 (paragraph 87). She could not see that ‘any particular unfairness would result from the existence of such a power’. Someone who preferred the original report ‘would still have the opportunity to challenge the new report and/or the withdrawal decision if they considered it flawed by public law error’ (paragraph 88).

Judge 2 then considered whether she was bound by a decision of the Divisional Court about the Parliamentary Ombudsman (R v Parliamentary Commissioner for Administration ex p Dyer [1994] 1 WLR 621) (‘Dyer’) to hold otherwise. She noted that the applicant in that case was in person. The applicant challenged a refusal by that Ombudsman to re-open his investigation. There were similarities and differences between the two legislative schemes. That Ombudsman only acted on a referral by a Member of Parliament and his role ended once he had laid a report before both Houses. She distinguished Dyer on three grounds: the issue was not whether that Ombudsman had power to withdraw a report when he considered it was wrong in law; the legislative schemes were different, and she doubted whether the Divisional Court intended to make a comprehensive statement of the legal position (paragraph 93).

She did not need to decide the Ombudsman’s alterative submission that decision 1 was ‘null and void’, but did not find it persuasive, in the light of R (Majera) v Secretary of State for the Home Department [2012] UKSC 46; [2022] AC 461, paragraph 29. ‘An unlawful administrative act or decision cannot be described as void, independently of a Court’s determination to that effect’ (paragraph 94). She did not need to decide, either, the Council’s challenge to decision 1 and Piffs Elm’s original ground 4 (paragraph 95).

Judge 2 then considered the three grounds of challenge to decision 3 (paragraphs 96-132).

She rejected the Section 70A Ground. This ground failed to acknowledge that Piffs Elm had told the Ombudsman in the letter of 2 May 2018 that it was not complaining about the section 70A decision. Piffs Elm had persuaded the Ombudsman ‘not to decline to investigate by disavowing this aspect’ and could not complain if he then did not investigate a part of the Complaint which had been abandoned. She rejected Piffs Elm’s attempt, in oral argument, to escape that conclusion by submitting that the Complaint concerned the refusal to refund the Fee in the context of the section 70A decision and of judgment 1. That was not the way the challenge had been pleaded, and the oral submission was a re-statement of the Context Ground, not an independent ground of challenge (paragraph 97). She also rejected the section 70A ground on its merits. In order to investigate this challenge, the Ombudsman would have had to decide whether refusals 1 and 2 were lawful in the light of judgment 1. He was entitled to take that view; it reflected the original terms of the Complaint. He had a wide discretion and while he could decide legal questions, the extent to which a complaint raised questions which would better be decided by the courts was ‘highly relevant’ to the exercise of the section 24A(6) discretion. He was entitled to decide that that aspect of the Complaint raised legal issues which ‘could be and were better determined by the Courts’. Judge 2 further noted that Piffs Elm had not contested the proposition that it could have challenged the section 70A decision by judicial review (paragraph 102).

Judge 2 then considered the Context Ground. She summarised paragraphs 83-84 of Piffs Elm’s pleading in paragraph 103. She accepted that Piffs Elm had indicated in correspondence that it relied on judgment 1. Piffs Elm’s reliance on refusals 1 and 2 was ‘more problematic’ as it read ‘as an indirect attack on the section 70A decision’ and Piffs Elm had disavowed that aspect of the Complaint (paragraph 104). The Ombudsman had only been willing to consider the Complaint in so far as it could be considered as a ‘standalone issue’. A wider approach would have required him to consider the legal significance of refusals 1 and 2 and whether it was reasonable to refund the Fee in the light of judgment 1. That was a legal question which could be decided on an application for judicial review. The Ombudsman was reasonably entitled, in the exercise of the discretion conferred by section 24A(6), to treat it as an issue which should be decided by the courts (paragraph 106).

Similar considerations applied to Piffs Elm’s reliance on judgment 1 for its impact on refusals 1 and 2 and whether it was appropriate for the Council to rely on refusals 1 and 2 in refusing to refund the Fee. That too, was ‘a legal matter for the Courts, or, at least, “inextricably linked” to the legal matters raised’. Judge 2 did not understand the Council to have refused to refund the Fee because they disagreed with the conclusions of Judge 1. In any event, it was open to the Ombudsman to consider that ‘this point was also bound up with the legal issues that he reasonably considered should be determined by Court proceedings’ (paragraph 107). The ‘“context” matters relied on’ by Piffs Elm were ‘far from “obviously material”…they were simply not relevant to the narrowed investigation…’. The focus of that was whether the Council were ‘at fault in not considering to exercise a discretion to refund’ the Fee (paragraph 108). The Ombudsman had only been prepared to continue the investigation because of assurances dated 28 September and 3 December 2018 that the complaints could be ‘disentangled’. If the Ombudsman had thought that he had to consider judgment 1 and refusals 1 and 2 in order to decide the Complaint, ‘he would have (permissibly) reverted to’ his earlier proposed course of action, that is, discontinuing the investigation (paragraph 109). Judge 2 also dismissed the reasons challenge to decision 3 (paragraph 110).

In paragraphs 111-132, Judge 2 considered the ‘Fault Ground’. Piffs Elm argued that the Ombudsman had erred in law in three ways in concluding that there was ‘no fault resulting in injustice’ in the Council’s refusal to refund the Fee. First, the Council had not at the time relied on the existence of ‘respectable legal arguments’ that they had no power to make a refund. The existence of fault should have been assessed solely by reference to the reasons given by the Council at the time. In any event, that was irrelevant to the question whether Piffs Elm had suffered any injustice and/or the Ombudsman had not explained how, if there was fault, there was ‘no unremedied injustice’. Third, the Ombudsman was wrong about the legal arguments: the Council plainly had power to refund the Fee (paragraph 111).

Judge 2 recorded the Ombudsman’s argument that Piffs Elm did not challenge his decision that it was not appropriate for him to decide whether or not the Council had power to refund the Fee as that was a question for the courts. Judge 2 considered that this had been pleaded by the Ombudsman. Judge 2 therefore accepted that Piffs Elm did not challenge the Ombudsman’s alternative ground that he found no fault as the question whether the Council had power to refund the Fee was for the courts to decide (paragraphs 112-3). The Ombudsman’s finding that he could not make a finding of fault would stand in any event, even if Judge 2 was persuaded by the ‘Fault Ground’. She would therefore refuse permission to apply for judicial review on that ground. She would consider its merits nevertheless (paragraph 114).

Judge 2 considered that the key to Piffs Elm’s first two arguments was the reasoning in paragraph 35 of decision 3. The Council had given various reasons why they would not refund the Fee. The argument that they had no power to do so was raised in their response to the Complaint and maintained after that. The Ombudsman ‘concluded in circumstances where a reason for the refund refusal existed that would not amount to fault, then no injustice had been suffered by the fact that this reason was advanced after, rather than at the time of the initial refusal’ (paragraph 115).

She accepted that this line of reasoning was open to the Ombudsman. He was not exercising a judicial review jurisdiction, but exercising a broad discretion in deciding whether there had been injustice. Moreover, the Council’s contention that they had no such power was their main argument to the Ombudsman and they would take that position in response to any recommendation by him. It was legitimate for the Ombudsman ‘to consider whether that position involved fault’ (paragraph 116).

The Complaint was that the Council had not refunded the Fee. A refund was the primary remedy sought. The other remedies sought were subsidiary to that remedy. If the Fee ‘could be retained without the alleged maladministration, then there was no financial loss or ancillary losses that flowed from the refund refusal’. The Ombudsman had not found that the reasons which the Council gave at the time amounted to maladministration. The Ombudsman, permissibly, decided only to investigate the failure to consider exercising the discretion to make a refund. Everything else was outside the scope of the investigation. Even in decision 1 the only injustice identified by the Ombudsman had been uncertainty about the way the discretion would have been exercised, if, as the Ombudsman had then considered they should have done, the Council had considered whether or not to exercise a discretion which the Ombudsman then thought that the Council had (paragraph 117).

Judge 2 distinguished R v Parliamentary Commissioner for Administration ex p Balchin [1998] 1 PLR 1 on two grounds. First, in that case the Ombudsman had found fault. It was not an answer in such a case to say that the outcome would have been the same in any event. Second, outrage and distress had been caused. There was no such finding here. Judge 2 did not accept, on the basis of Rapp, that in considering whether or not there was injustice it was necessary to focus only on what was known at the time. There is, in any event, no warrant for limiting such a broad concept in that way (paragraph 119).

In paragraphs 120-131 Judge 2 considered the parties’ arguments about whether or not the Council had power to refund the Fee. She emphasised that she was not deciding whether or not the Council had power to do that, but, rather, whether Piffs Elm was right that the Ombudsman had erred in law in deciding that there were respectable legal arguments that the Council did not have such a power (paragraph 120). Counsel agreed that there was no relevant express power and no relevant case law (paragraph 121). She was not addressed on the question whether the Council could have refunded the Fee pursuant to section 31(3)(b) of the LGA, had the Ombudsman found that there was maladministration (paragraph 124).

Since the Council did not accept that they were or might have been guilty of maladministration, section 92(1) of the 2000 Act (described as Piffs Elm’s ‘strongest candidate’) did not apply (paragraphs 125-126). There were arguments both ways as regards section 1(1) of the 2011 Act (paragraphs 127-128). There was a respectable argument that section 111(1) of the 1972 Act give the Council such a power (paragraphs 129-132). Judge 2 rejected a reasons challenge as ‘unarguable’. The Ombudsman had explained at some length in decision 3 why there were respectable arguments on both sides (paragraph 132).

Judge 2 therefore dismissed Piffs Elm’s argument that the Ombudsman had no power to withdraw decision 1, refused permission for Piffs Elm’s ‘Fault Ground’ and dismissed Piffs Elm’s other challenges to decision 3. She did not decide the challenges brought by Piffs Elm and by the Council to decision 1.

Judge 2 made an order on 5 July 2022 (‘the order’), dealing with costs. In paragraph H of the reasons for the order, Judge 2 dealt with the costs of JR3. Judge 2 said that the three grounds relied on by the Council in JR2 ‘were considerably wider’ than the concession made in the Ombudsman’s summary grounds. It did not follow from Judge 2’s conclusions in paragraphs 77 and 78 of the judgment (that the Ombudsman reasonably believed that decision 1 was flawed for the reasons given there) ‘that grounds of challenge in [JR3] would have succeeded, or that this was a highly likely outcome, particularly in respect of Ground 2, which raised the most substantial issues’.

There are three grounds of appeal, as amended with the permission of Dingemans LJ, which he gave on the papers.

Dingemans LJ (again on the papers) gave

I agree.

I also agree.