Lloyd v McMahon

Procedural fairness does not invariably require an oral hearing. Its requirements depend on the character of the decision-maker, the nature of the decision and the governing statutory framework. A statute implies only those additional safeguards needed to achieve fairness. Adequate notice and a full opportunity to make written representations may suffice, particularly where the material facts are documentary and no oral hearing is requested.

Where legislation provides an unrestricted appeal on evidence to a court, that court may remedy a procedural defect at first instance. A full merits hearing may cure the defect, although gross unfairness or extreme prejudice may justify quashing the original decision. Sincere political motives do not excuse the conscious and deliberate breach of a statutory duty or prevent recovery of the resulting loss.

The appellants were 47 Liverpool city councillors. They deliberately delayed setting the city's rate for the 1985–86 financial year while seeking additional central government funding. The district auditor concluded that the delay constituted wilful misconduct and had caused a loss of £106,103. He certified that amount under section 20(1)(b) of the Local Government Finance Act 1982.

The councillors had received detailed notice of the proposed certification and submitted extensive collective written representations. They did not request an oral hearing. The Divisional Court dismissed their statutory appeal after a full hearing on the evidence. The Court of Appeal unanimously affirmed that decision.

On the appeal in Lloyd v McMahon [1987] AC 625, the principal questions were whether fairness required the auditor to offer an oral hearing, whether adequate notice had been given, and whether any procedural defect could be remedied through the broad statutory appeal to the High Court.

1. Disposition. The House unanimously dismissed the appeal and affirmed the Court of Appeal's order. Lord Keith of Kinkel, Lord Bridge of Harwich and Lord Templeman delivered reasoned speeches. Lord Brandon of Oakbrook and Lord Griffiths agreed with all three.

2. Requirements of fairness. Per Lord Bridge, with the other Law Lords concurring in the result and reasoning, procedural fairness has no inflexible content. Its requirements depend on the decision-making body, the kind of decision and the statutory framework. Where legislation empowers a body to affect individual rights, the court implies only those additional procedural safeguards necessary to secure fairness.

3. No mandatory oral hearing. Per Lord Keith and Lord Bridge, the auditor had supplied the councillors with the documentary case against them and invited representations. Their detailed collective response was fully considered, and they neither requested an oral hearing nor identified material oral evidence that could have changed the issues. The facts were undisputed and the auditor was entitled to draw inferences from the documents. Lord Templeman added that sincere motives could not excuse a deliberate breach of statutory duty. The absence of an unsolicited oral hearing therefore caused neither unfairness nor prejudice. An oral hearing could nevertheless be essential where disputed personal evidence or credibility must fairly be tested.

4. Statutory appeal. Per Lord Bridge, Lord Keith and Lord Templeman, section 20(3) of the Local Government Finance Act 1982 confers an exceptionally broad appellate jurisdiction. The court may receive new evidence, determine the merits for itself, and confirm, vary or quash the auditor's decision or issue any certificate the auditor could have issued. Whether an earlier procedural defect should result in quashing is a matter of judicial discretion. Gross defects or extreme prejudice may justify that course. Where, as here, the court has conducted a complete merits hearing and found certification justified, it would be erroneous to quash solely because of an earlier procedural defect.

5. Wilful misconduct, causation and costs. Per Lord Templeman, with Lord Brandon and Lord Griffiths agreeing, councillors cannot rely on democratic mandate or sincere political purpose to excuse a conscious breach of statutory duty. Lord Keith and Lord Bridge agreed that the deliberate delay caused the certified financial loss. Each appellant was ordered to bear one forty-seventh of the auditor's costs, subject to legal-aid protection, and unrecovered costs were not to fall upon Liverpool.

1. House of Lords: In Lloyd v McMahon [1987] AC 625, the House unanimously dismissed the appeal and affirmed the Court of Appeal's order.

2. Court of Appeal: Lawton, Dillon and Woolf LJJ unanimously dismissed the councillors' appeal and granted leave to appeal to the House of Lords. Lawton LJ considered that an opportunity to address good faith orally should have been given, and Dillon LJ inclined to that view. Both concluded that the full merits hearing in the Divisional Court could cure any defect. Woolf LJ found no unfairness when the proceedings were considered as a whole.

3. High Court, Divisional Court: Glidewell LJ, Caulfield and Russell JJ dismissed the statutory appeal after a full hearing. They found wilful misconduct and causation established and held that the councillors had received a sufficient opportunity to meet the auditor's case.

4. District auditor: The auditor certified under section 20(1)(b) of the Local Government Finance Act 1982 that £106,103 had been lost through the councillors' wilful misconduct.