Magill v Porter and Magill v Weeks

A local authority may exercise a statutory power only for the public purpose for which it was conferred. Politicians may hope that a lawful policy will bring electoral support, but they may not use public powers for the purpose of securing party-political advantage.

A councillor commits wilful misconduct by deliberately doing what is wrong while knowing it to be wrong or being recklessly indifferent to that question. Where such misconduct causes loss, the statutory surcharge is compensatory and restores the authority to the position it would have occupied without the wrongdoing.

Apparent bias is assessed by asking whether a fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility of bias. The right to determination within a reasonable time is a separate guarantee and does not depend upon proof of prejudice.

The auditor appointed to examine Westminster City Council's accounts certified that its leader and deputy leader had caused substantial loss by wilfully promoting a policy of selling council housing to increase their party's electoral strength in marginal wards. The Queen's Bench Divisional Court upheld their liability but reduced the certified sum: (1997) 96 LGR 157.

A majority of the Court of Appeal allowed their appeals on liability, principally because it considered that they had relied upon legal advice and that their treatment was inconsistent with the exoneration of other participants: [2000] 2 WLR 1420. The auditor appealed.

The principal questions were whether the sales policy was an unlawful use of municipal power; whether the respondents knowingly or recklessly participated in it; whether their conduct caused the council's loss; how that loss should be measured; and whether apparent bias, delay or other unfairness invalidated the audit proceedings.

1. Appeal allowed unanimously. Lord Bingham of Cornhill delivered the leading speech on liability and quantum. Lord Steyn agreed completely; Lord Hope of Craighead agreed on liability and, subject to observations about possible double counting, on quantum; Lord Hobhouse of Woodborough and Lord Scott of Foscote also agreed in the result and reasoning. The auditor's certificate was restored in the sum upheld by the Divisional Court.

2. Per Lord Bingham, statutory powers are entrusted to local authorities for public purposes. Councillors may legitimately hope that a policy adopted for proper local-government reasons will attract electoral support. They act unlawfully, however, where the purpose for exercising the power is to promote a political party's electoral advantage. The power of disposal under section 32 of the Housing Act 1985 could not lawfully be used to alter the electorate in marginal wards.

3. Per Lord Bingham, the auditor and Divisional Court were entitled to find that the respondents devised, promoted and concealed the policy; knew that its electoral purpose was unlawful; and did not rely upon advice that could legitimise it. Their conduct satisfied the accepted definition of wilful misconduct: deliberate wrongdoing with knowledge of its wrongfulness or reckless indifference to that question. The Court of Appeal had no sustainable basis for displacing those primary findings.

4. Per Lord Bingham, the Housing Committee's decision did not break the chain of causation. The leadership placed the policy before a committee whose chairman and vice-chairman knew its improper purpose, while other members lacked the information required for an informed and independent judgment. Lord Scott reached the same conclusion because the tainted votes were necessary to carry the resolution.

5. Per Lord Bingham, section 20(1) of the Local Government Finance Act 1982 embodies a compensatory principle. The council was entitled to the difference between the dwellings' full vacant-possession market value and the discounted sale prices. A wrongdoer could not claim the benefit of a hypothetical lawful policy under which the council might have sold at the same discounts. Lord Hope considered the alleged double-counting difficulty arguable, but concluded that the factual findings did not permit disturbance of the auditor's calculation.

6. Per Lord Hope, proceedings under section 20 were civil, compensatory and regulatory rather than criminal. Any deficiency in the auditor's structural independence was cured by the Divisional Court's power to conduct a complete rehearing and itself confirm, vary or quash the decision.

7. Per Lord Hope, the test in R v Gough [1993] AC 646 required adjustment. The question is whether a fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility of bias. The auditor's press conference was an error of judgment and self-promotion, but objectively it did not establish such a possibility.

8. Per Lord Hope, the reasonable-time guarantee in article 6(1) is distinct from the right to a fair hearing and requires no proof of prejudice. Complexity, the parties' conduct and the authorities' handling of the proceedings must be assessed. The vast and continuously active investigation, followed by a timely rehearing, did not exceed a reasonable time.

1. House of Lords: The auditor's appeal was allowed unanimously. The certificate was restored in the sum upheld by the Divisional Court.

2. Court of Appeal: By a majority, the court allowed the appeals of Dame Shirley Porter and Mr David Weeks on liability and quashed the certificate: [2000] 2 WLR 1420. Robert Walker LJ dissented on liability.

3. Queen's Bench Divisional Court: The court upheld the respondents' liability but reduced the certified sum. It allowed the appeals of another councillor and two officers: (1997) 96 LGR 157.