London Borough of Brent, R (on the application of) v Fed2000 & Ors

MR JUSTICE LLOYD JONES: This an application for judicial review by the London Borough of Brent. The defendants are a charity known ASFED2000 ("the trustees") and the Temporary Governing Body of the Avenue School ("the governing body").

The decision, which is challenged, is the failure by the trustees and governing body to run the school as a maintained voluntary aided school, which is said to be an ongoing matter. The relief which is sought includes a declaration that the school is, and since 1st April 2005 has been, a maintained voluntary aided school. Furthermore, orders are sought requiring the trustees to implement the proposals and requiring the governing body to conduct the school as a maintained voluntary aided school.

The Avenue School was founded in September 1996 by the trustees. It was, and is, a co-educational Muslim primary and nursery school catering for children from the age of three upwards. The school was founded specifically to deliver Koranic studies, Islamic studies and Arabic, together with the national curriculum in an Islamic environment.

In January 2002, the trustees instigated the idea of applying for voluntary aided status ("VA status") when they had their first meeting with a consultant, Mr Devereux, who advised them in relation to their application for VA status. On the advice of Brent, at that time, the school went through an OFSTED style inspection in June 2002. I refer to one paragraph of the report:

Mr Megerisi, one of the trustees, in his witness statement explains that historically the Avenue School had significant financial shortfalls which were met through the generous donations of an Islamic Charity Trust known as Elrahma. He explains that the ordinary running costs of the schools as a private institution were £5,700 per annum per pupil, whilst the school charged parents £3,600 per annum per pupil in school fees. So all pupils had some degree of subsidy. In addition Elrahma had granted a lease of the school buildings at a peppercorn rent. The school functions in buildings which belong to Elrahma. In addition Elrahma has provided bursaries for parents who are unable to pay the subsidised fees. Mr Megerisi says in his witness statement that this charity made it clear, in the very beginning, that its financial help was temporary and that the use of its property was strictly conditional on the school maintaining its Islamic ethos and teaching Arabic, Islamic and Koranic studies.

The school first attempted to obtain VA status in October 2002. It as unsuccessful because the TCF route (Targeted Capital Fund route) was over-subscribed for that year.

The trustees made a second application for VA status in 2004. On 28th May 2004, the trustees published a statutory notice proposing VA status. On 13th December 2004, the local education authority executive approved VA status with effect from 1st April 2005. On 20th December 2004, the SOC (the School Organisation Committee) which is a committee independent of the LEA, approved VA status for the Avenue School with effect from 1st April 2005.

However, by March 2005 some members of the governing body were expressing doubts about the desirability of achieving VA status for the Avenue School. Mr Hyams, counsel for the trustees, has submitted that there were a number of different considerations in play here. One consideration was that as a result of section 71 of the School Standards and Framework Act 1998, ("the 1998 Act") it was possible for parents and pupils at the school to require that their children were not given an education in accordance with the tennets of the particular religion, that is, in this case, Islam.

Furthermore, there was concern that as a result of sections 450 and 451 of the Education Act 1996 a parent may not be required to make any payments with regard to the admission of his or her child to a VA school, or in respect of most of the education provided in such a school. Mr Hyam's submission is that these two factors, of which the trustees were not aware until after 21st December 2004, were matters of particular concern to the trustees and that it became apparent to the trustees that if the school became a VA school then the continuation of its ethos would not be insured.

In addition, the trustees were concerned because although they would have been able to provide some funding for the school, they could not provide funding above a certain level. There was said to be concern as to a possible shortfall in the budget. An initial approach by the school to the parents had a disappointing response. The parents were not, at that stage, saying that they would make up the shortfall for the cost of religious education. In the view of the trustees this made it impossible for the trustees to ensure that the education they wished to provide could continue to be provided.

I need to set out to some of the facts in greater detail. The story can be picked up in March of this year. On 9th March there took place the first meeting of the Temporary Governing Body. At that meeting Dr Al-Shaikh Ali, who was the Chairman of the meeting, raised concerns in relation to the funding of salaries for two Arabic teachers. He stressed that if the parents were not prepared to contribute to at least the salaries of two Arabic teachers the trustees might reconsider the VA option and keep the school as an independent fee paying school, which he said might lead to doubling the existing fees. He added that there would not be any funds available from Elrahma either for the annual deficit, or for assistance to parents who were unable to pay fees.

On 23rd March, Mr Devereux, the consultant to whom I have referred, wrote to Judith Joseph of Brent requesting deferment of the implementation date until 1st September 2005. He indicated that a further application for variation would then follow. But on the same day the trustees had written to the parents giving a very different message. Their letter of 23rd March 2005 referred to the very poor response received from parents to a letter of 11th March setting out a number of proposals and stated that they had decided that the Avenue School would continue as an independent school charging higher fees to enable them to meet the running costs without the need to be heavily subsidised by any charitable organisation. Their letter also stated that from their first contact with the education department in Brent they had been advised that they needed to go through a legal process to revoke the VA status and that therefore they would be operating as a VA school for the summer term only. Consequently the parents would not be required to pay fees for the summer term. However, it also stated that the Board of Trustees' decision to revoke VA status would take effect from September 2005 when the school will operate as a fee paying independent school.

On 30th March Mr Joseph replied asking for further details and, in particular, details as to the status of the body which had made the decision. On 5th April, Mr Romain, a senior education lawyer at Brent, wrote to Mr Devereux stating that:

On 6th April 2005, Mr Crathorne, an official in the Department for Education and Science, wrote to Brent expressing agreement with Mr Romain's assessment, but added that:

On 12th April 2005, the trustees wrote to Mr Romain. The letter refers to paragraph 5 of Schedule 6 and to section 30 of the 1998 Act. That letter asks, first, for deferral of implementation and VA status, and alternatively it asks that VA status should be held only until 1st September 2005 when the Avenue School could revert to being an independent school.

On 13th April, the following day, a letter from the Parents and Teachers Association of the school to the Director of Education of Brent stated that the parents of pupils at the school were delighted when the proposals for the school to become a VA establishment were approved. It continued:

On the same day, 13th April 2005, there took place a meeting of the SOC (the School Organisation Committee). At that meeting Mr Megerisi, on behalf of the trustees, asked for clarification on whether the implementation date could be deferred. Mr Romain confirmed that it could be deferred by the SOC. Mr Megerisi explained that the trustees of the Avenue School were seeking deferment because although they went down the VA route in good faith facts about the school had changed. A shortfall in the funding, compared to what the trustees originally thought would have been the school's budget share commitment, meant that the school could not balance its budget. The Avenue School was a faith based school which wanted to maintain its faith, and the trustees had taken the decision to propose deferral of the implementation date to allow time for consultation as to which direction the school ought to take.It should ne noted that Mr Megerisi indicated that the trustees were asking for a deferment but not for a reversal of VA status.

A number of parents spoke at that meeting and one referred to a further questionnaire that had been devised by some of the parents, which had revealed that parents were prepared to make donations totalling between £70,000 and £100,000 to help with the funding of the school.

The members of the SOC, perhaps understandably, were concerned that they needed further information and clarification of the issues. As a result they declined to take the decision in respect of the application for deferment at that meeting and the issue was adjourned to a later meeting.

On 15th April, Stallards, a firm of solicitors acting at that time on behalf of the trustees, wrote to Brent making various complaints about the procedure which had been followed at that meeting on 13th April. However, those allegations are not pursued in these proceedings. So I make no further reference to them.

On 18th April, Mr Romain wrote to Stallards setting out the options which were available. It appeared to him that the alternatives were:

The next meeting of the SOC was due to take place on 27th May. In advance of that meeting a letter was sent to Brent from four parents arguing strongly in favour of VA status. That is a cogently argued document. It also indicated what an unhappy state of affairs had been arrived at. It stated that at no time had there been any formal consultation with parents, or anyone else, about the decision of the trustees to revoke the VA status of the school. It stated that at no time previously had the parents been told that the VA status of the school was conditional on paying for extra-curricular activities. The point was made that at the last SOC meeting on 13th April the trustees appeared to have shifted their position again and seemed to be saying that they in fact had a deficit in their budget which they appeared to want the parents to pay for, in addition to their payments in respect of Arabic and Islamic studies. The letter also stated that:

Brent prepared a consultation paper for the parents. That was in the form of a questionnaire and it was circulated in advance of the meeting of the SOC on 23rd April. I refer to it simply for one item where the parents were asked:

The answer "No" was given by a resounding majority of 72 to 8. Brent also produced a further consultation paper for the SOC meeting on 27th May and the conclusion of that paper, which was signed by Mr Christie, the Director of Education, was that:

It was against that background that the meeting of the SOC took place on 27th May. At this meeting the trustees were now asking for indefinite postponement of the VA status. It was at this meeting that there was raised expressly for the first time a point in relation to the inclusion in the budget of nursery funds. It is a matter to which I shall return. However, it should be pointed out that Mr Hyams (counsel who has appeared for the trustees in this application) was present at the meeting representing the trustees. He addressed the meeting and identified two reasons why the trustees were seeking modification of the proposals so that the VA status could be indefinitely postponed. The first reason he gave for the deferment was that:

The SOC took a decision at that meeting unanimously to reject the trustees’ proposal for deferral.

On 9th June, the trustees wrote to the parents of the pupils at the school. It referred to the budgetary shortfall. It also referred to the free usage of the school property.

That position on the part of Elrahma is in fact apparent from a letter from Elrahma to the trustees, dated 7th June 2005. It says in relevant part:

So it appears that by 9th June 2005 the trustees had decided not to comply with the decision of the SOC.

Also on 9th June, the trustees wrote a letter to Mr Christie, the Director of Education of Brent, claiming they had been misled over funding. There then followed unsuccessful attempts at mediation between the parties. On 30th June 2005, Brent issued a judicial review application. It did so clearly in order to protect its position against any time point that might be taken against it. Sensibly it did not publicise the fact that that application had been issued while talks were continuing.

The next crisis arose in early September at the start of the new school year. On 5th September, the trustees wrote to certain parents. It is not clear to how many it was sent, but a number of parents received a letter which stated:

As a result Brent made an urgent application for relief to this court and on 7th December Tugendhat J made an interim injunction. That injunction restrained the defendants until 24th October of further order from removing from the roll of the school or otherwise discriminating against any child (including any child due to be admitted to the school at any time during the academic year) by reason that school fees had not been paid on his behalf. It also ordered the defendants to reinstate to the school roll of any child whose name has been removed from it for such reason within the past week.

A further development occurred on 3rd October, although it was one of which Brent was not made aware until the close of the first day of this hearing and which was first drawn to my attention this morning. On 3rd October 2005, the trustees wrote a letter to Elrahma stating:

While Brent and the court had been aware aware that notice had been given to the staff, neither Brent nor the court was aware that the trustees had, by letter of 3rd October 2005, given notice that they would not be utilising the premises as from 1st January and inviting the Elrahma trustees to regard the letter as notice of their wish to surrender the lease.

I have read a large number of letters from parents of pupils at the school. Clearly the position which has been reached is very serious and acutely unhappy. The parents are understandably very worried about the arrangements for the education of their children and the future of the school.

The School Standards and Framework Act 1998 makes provision for schools to become voluntary aided schools. Section 24 requires each local education authority to establish a School Organisation Committee in accordance with Regulations made by the Secretary of State. Such committees are independent of the LEA. The SOC is not represented in these proceedings.

Certain decisions of the SOC can be referred to an adjudicator for whom provision is made in section 25 of the 1998 Act.

Under section 28 there exists a machinery for establishing a voluntary school.

There is also mechanism for discontinuance by two routes: one under section 29 where a local education authority proposes to discontinue and one under section 30 where the governing body proposes to discontinue.

More detailed provision for the implementation of proposals is contained in Schedule 6, paragraphs 3 and 5. Paragraph 5 states:

Paragraph 5(5) and (7) makes provision for recourse to the adjudicator in the event of dissatisfaction with decisions of the SOC.

The central question, for the purpose of this application, is whether the defendants are subject to an obligation to give effect to the conversion of the Avenue School from independent status to VA status. Paragraph 5 of Schedule 6 makes clear that where the proposals have been approved they shall be implemented in the form in which they were so approved or determined. In the present case the proposal made on 28th May 2004 was approved by the LEA on 13th December 2004 and by the SOC on 20th December 2004. All the necessary steps have been taken in this case. Furthermore, the SOC gave the matter further consideration on two subsequent occasions and on the second occasion decided to take no action to remove or vary the content of that duty. It is common ground between the parties that the defendants were subject to such a duty, subject to points raised by way of defence.

The first point which was taken on behalf of the trustees was that the consent of the Charity Commissioners was required to the bringing of these proceedings by section 33 of the Charity Act 1993. That is a jurisdictional issue. I have dealt with it as a preliminary issue in a preliminary ruling. For the reasons there stated I conclude that the consent of the Charity Commissioners is not required for the bringing of these proceedings.

Next the defendants say (and this became perhaps the central issue in the case) that a shortfall of funding meant that the decision of the SOC was tainted by unfairness and therefore should not be given effect. It is necessary to look at the facts in relation to that a little more closely. It does seem to me that there was a misunderstanding initially between the trustees and Brent in relation to one issue. The proposal made by the trustees in May 2004 states, in terms, that there will be no nursery class. However, Brent proceeded on the incorrect basis that the nursery would be included in the new VA school and accordingly Brent accepts that it put forward its indicative figure for its budget share on the basis that the school included the nursery. That indication was that Brent's budget share would be in the region of £650,000.

In the event, the actual share of the budget to be borne by Brent in the first year of the operation of the VA school, after the exclusion of the nursery, was £579,000. Mr Stratford, an officer of Brent, explains in his witness statement that the figure in the region of £650,000 was intended to be indicative, not a precise figure on which the school could rely.

In these proceedings it is now said for the trutees that they were misled and they would not have bound themselves had they known the true position.

Both the school and the trustees were aware at an early stage that Brent was proceeding on a mistaken basis. In January 2005, according to Mr Stratford's evidence:

The school was certainly aware of that because on 24th February 2005 Mrs Fernandez, the headmistress of the school, wrote to Mr Stratford in respect of the draft budget share stating:

In the following month, on 2nd March 2005, she wrote to Judith Joseph at Brent saying:

This indicates that both parties were aware of the discrepancy. It indicates that the matter had previously been discussed, that the trustees had taken an informed decision but nevertheless remained willing to explore the matter further. The point is now made that by this stage the trustees were already committed and that is correct. The trustees were committed to the school becoming a VA school once the proposal had been accepted by the SOC in December. However, it is relevant that the matter had not assumed the importance it has subsequently assumed. It is also important that the matter was not at that stage the subject of protest or of complaint.

The claimants say, in these proceedings, that they would expect greater clarity and particularity in the making of an allegation that Brent had misled the trustees. To my mind, there is considerable force in that. In particular, we do not have evidence in these proceedings as to the material which was before the SOC when it took its decision in December 2004. We are not able to assess, directly at least, what part this consideration may have played in any deliberations.

It is also apparent from the papers that in December 2004, when the proposal was accepted, many matters of funding were outstanding to be negotiated and resolved between the parties. That is clear from Mrs Fernandez’s letters of February and March 2005, to which I have referred. Furthermore, I have already referred to the fact that the figure in the region of £650,000, which was given, was stated by Brent only as indicative.

Nevertheless, it is convenient to consider what would have been the effect had the defendants been misled as they now maintain that they were. The defendants say that this amounts to procedural unfairness and that as a result Brent should not be permitted to enforce the public law obligations of the defendants. The trustees rely on R v the Bolton Justices, ex-parte Scally [1991] 1 QB 537 where that court quashed a large number of convictions for driving with excess blood alcohol because the courts had been inadvertently misled as a result of a defect in the blood kits used by the police in Greater Manchester. The ratio of the case appears at page 556 in the judgment of Watkins LJ where he says:

In the extreme circumstances of that case the court was prepared to make an exception to the principle of finality and to quash the convictions. Mr Hyams makes the point that the principle is not limited to criminal proceedings but has been applied to other judicial proceedings; see the judgment of Munby J in R v (Marsh) v Lincoln District Magistrates' Court [2003] EWHC 956 (Admin). Nevertheless I have difficulty in seeing how this principle can apply in the present case. It is not clear that the SOC did act on a false basis in accepting the proposal. Indeed the defendant's case is not that the SOC was misled but that the defendants were misled. Even if the SOC had in December proceeded under a misapprehension, it later had the true position drawn to its attention at the meeting in May but took no different course.

In my judgement this was pre-eminently a matter for consideration by the SOC. The SOC was bound to take account of the viability of proposals which were put before it. In fact this matter was raised before the SOC. At its meeting, on 13th April, the shortfall in funding was raised on behalf of the trustees, although the minutes do not expressly refer to the shortfall as a result of the exclusion of the nursery. The question of the inclusion of the nursery may well be the matter referred to.

When we get to the second meeting of the SOC, on 27th April, this is one of the two matters referred to by Mr Hyams in terms which expressly relate to the inclusion or exclusion, of the nursery. Nevertheless, notwithstanding that fact, the SOC decided unanimously not to alter the existing arrangements. The funding position was, in its view, not such as to support the trustees' application for an indefinite delay. In my judgment that was a decision that they were entitled to reach. I have already referred to the submission of Brent which was before the meeting. I consider that it was open to the SOC reasonably to come to that conclusion and to accept that submission on behalf of Brent.

Moreover, at that meeting Mr Hyams, on behalf of the trustees, was expressly asked by one member of the Committee, whether the process was flawed and what would be the consequences if the SOC did not agree with the proposal. Mr Hyams was recorded as replying: "No flaw in procedure. If SOC does not agree he could not say what the school would do". I take that as an indication that it was not suggested that there had been any unfairness in the procedure before the SOC.

The matter does not stop there. If the trustees considered that there was illegality or procedural unfairness in that decision, the appropriate course would have been for them to apply at that stage for judicial review. The trustees, although they were in receipt of legal advice at that time, did not follow that course.

In the course of these proceedings Mr Hyams went so far as to submit that the appropriate course was to wait until someone tried to enforce the obligations and then to resist that on the basis of the unfairness of what had occurred rather than seeking to challenge the decision of the SOC. In my judgement that is incorrect. It is undoubtedly the case that there are circumstances in which a defendant, defending a private law action, can raise a public law defence provided it is not an abuse of process to do so. In the course of these proceedings I have been referred, in that regard to Wandsworth London Borough Council v Winder [1985] AC 461, and Rhondda Cynon Taf v Watkins [2003] 1 WLR 1864. However, this has not been permitted in circumstances where the defendant is not himself asserting a private law right, but merely challenging the entitlement of the claimant to act as he has. See the decision of the Court of Appeal in Avon County Council v Buscott and Others [1988] 2 WLR 788. In my judgement this is such a situation. The trustees are not seeking to uphold or vindicate any private law right; rather they seek merely to impugn the right of the claimant to enforce statutory obligations arising in public law out of the arrangements between the parties.

Any challenge to the legality of the SOC’s decision should have been raised by way of judicial review. In any event, for the reasons I have given I do not consider that there was any illegality or procedural unfairness in the proceedings before the SOC. For these reasons I consider that the matters now complained of, even if established as matters of fact, could not afford a defence to the defendants in these proceedings.

The other substantial matter was raised by Mr Hyams, on behalf of the defendants, was his submission that this court, in the exercise of its discretion, should decline to enforce the obligations on the defendants. Here he makes a number of submissions. First, he says that this relationship arising in public law is in the nature of a partnership. It necessarily requires co-operation between the parties and where the relationship has broken down the court should be slow to take steps to require compliance. Secondly, he says that it would have been open to Brent to give financial support to the promoters of the school to overcome the impasse which has arisen and that I should take account of the fact that they have not done so. Thirdly, he makes the point that, as he puts it, the obligation has only arisen because the trustees were given misleading figures by Brent. I have already indicated that it is far from clear on the facts that that is what occurred. Fourthly, he submits that it would serve no purpose for the court to make an order because the trustees are precluded by the lease from parting with possession of the land.

In this regard I should draw attention to clause 3.22 of the lease which is a covenant on the part of the tenant not to:

Although this matter was not fully argued before me I have difficulty in seeing that clause 3.22 does necessarily have the effect for which Mr Hyams contends, or that acceptance of VA status by the school would necessarily place the trustees in breach of clause 3.22. Indeed, if the trustees are right on this point VA status could never have been achieved by the school while it continued to use these premises, unless the landlord was prepared to waive his rights.

In this regard I should also refer to the matter drawn to my attention this morning; the letter of 3rd October 2005 in which the trustees advise Elrahma that as from 1st January 2006 they will not be utilising the premises for the purposes of running an independent school, and hence trustees should regard the letter as notice of their wish to surrender the lease as of 1st January 2006. Mr Oldham has drawn my attention to authority that a puported surrender of a lease from a future date can only operate as an agreement to surrender the lease. Be that as it may, the outcome of this case cannot be influenced by any attempt by the trustees to pre-empt issues or to place themselves in a position where they are unable to perform their obligation, if that is in fact what has occurred here.

Then Mr Hyams submits that the school would not be viable. In my judgement that is a matter for the SOC and not a matter for this court. In any event, it does not appear to me that that is the case. On 27th May of this year the SOC took a decision not to defer. They took that decision in full knowledge of the position. So far as financial viability and the maintenance of the particular ethos of the school is concerned, I bear in mind that the parents have expressed their willingness to contribute between £70,000 and £100,000 for extracurricular activities, including Arabic and Islamic studies. But this is, in any event, a matter for the SOC.

It seems to me that there are further compelling reasons why the defendants' obligations should be enforced in the circumstances of this case. The first is that the statutory duty on the defendants is clear. I note that there is a statutory mechanism contained in paragraphs 5(2) and (3) of Schedule 6 by which it is open to the parties to make further applications to the SOC for modification, or even deferral, of the implementation proposals. I do not accept the trustees' submissions that these provisions have no application in the circumstances of the present case.

Moreover, I accept Brent's submission that in these circumstances it is not appropriate for the court, by the exercise of its discretion, further to qualify the statutory duty, which is a clear duty, or to usurp the function of the SOC.

A further vital consideration is that it is possible to save this school by requiring the defendants to perform their statutory obligations. The school is obviously going through a very troubled period. Nevertheless it is clear to me that because of its particular qualities and its ethos it is of particular value to the Muslim community and to the wider community at large.

I have been shown many letters from parents all arguing for the survival of the school as a VA school. Clearly that cannot be decisive, as Mr Hyams points out. The trustees also hold strong and genuine views as to what should happen. But they intend to close the school and if they do something of value will be lost. I consider that if the school can be saved this will confer a real benefit on the public.

In this regard I refer to the evidence of Mr Romain in relation to the present position of the school. He says this:

Accordingly, in the exercise of my discretion I propose to enforce the obligations of the defendants under the 1998 Act. I will in due course hear counsel on the terms of an appropriate order.

Finally, I should make it clear that in the light of the order of the court it will be for all parties to co-operate to give full effect to the new status of the Avenue School in the best interests of its pupils and the community which it serves.

What your Lordship ought to bear in mind is this: some of the parents have paid for education from 1st April 2005 and may well, I suspect, want their money back. I suppose if your Lordship were to order that the school had VA status from 1st April the LEA may pay the money to the school and the parents say, 'The school has the State's money. Please can we have our fees back out of it?' There is a real practical concern there. I am tempted to leave the matter in your Lordship's hands. That, I suspect, will not be help for your Lordship.

In my submission, what I ask permission to appeal on, in any event, is I say this is a proper arguable point and what you have done, by the position you have, is to deprive the trustees of a potential defence. I accept you have concluded that it is not made out on the facts. Also, as I say, it deprives the trustees of a route finding of which they could have avoided the application of the obligation by saying that they should have gone to the SOC which, in my submission, was not a proper remedy alternative for them. I say permission to appeal on that basis would be appropriate.

I hope that would not prejudice anyone and protect everyone. My learned friend may say there is no reason why the trustees should be getting on and implementing the proposals. I say there is pending the agreement of the final package. I say there is every reason why we should. Your Lordship has found them to be in breach. A lot of time has been lost already and, at the end of the day, there is not going to be, as I understand it, any package of orders which will not require them to implement the proposals. I would suggest those three ways forward.

In the meantime the school is running and it is running until the end of the time. There is no urgency about the situation.