Terry, R (on the application of) v Tower Hamlets

Where a public authority has failed to comply with procedural obligations but has an arguable defence, permission to participate may properly be granted at a late stage. The court must balance the prejudice to the claimant against the consequences of shutting out the defence, including any unjustified windfall payable from public funds.

Any prejudice caused by delay may be addressed through conditions, directions and costs orders. A transfer to another court may be made for practical convenience without finally determining a disputed jurisdictional issue. The court may also impose a costs condition preventing reliance on a statutory costs restriction for the period caused by the default.

The claimant, an elderly tenant of the defendant local authority, brought judicial review proceedings concerning his right to buy his council house at a substantial discount. Permission had previously been granted by Charles J. The local authority failed to lodge an acknowledgment of service and sought permission to participate only shortly before the substantive hearing.

The local authority argued that the dispute was essentially a private-law landlord-and-tenant dispute suitable for the county court. The central issues were whether it should be allowed to defend despite its defaults, what conditions should govern that permission, and where the factual dispute should be tried.

1. Permission to defend. The local authority’s defaults were serious and continuing, but refusing permission would effectively deprive it of any opportunity to defend. The claim would otherwise be overwhelmingly likely to succeed, although the claimant might receive a substantial windfall if the authority had a good defence. The claimant could be compensated for procedural detriment through costs and appropriate conditions. In the circumstances, justice required that the authority be permitted to defend.
2. Costs condition. The court did not determine whether Housing Act 1985, section 181(3), applied. However, as the authority could and should have raised the point earlier, permission to defend was conditional on its not relying on section 181(3) against the claimant for the period from immediately after Charles J’s order until the present hearing. Costs generally were left to the trial judge.
3. Transfer and venue. The dispute was essentially factual and would conveniently be tried in the county court, but the court did not decide the jurisdiction issue. After the listing difficulties became apparent, the final order transferred the proceedings to the Queen’s Bench Division to continue as though issued there, with a hearing sought on the first open date after 18 November.
4. Further directions. The court directed appropriate disclosure and further evidence so that the case could be tried promptly. It ordered a transcript of the ruling on the application and transfer terms, initially to be paid for by the local authority, subject to the trial judge’s ultimate costs decision.

Permission for judicial review had previously been granted by Charles J on 27 April 2004. The present judgment dealt with the defendant’s late application for permission to participate and defend. It was not an appeal.