Chapman v South Holland District Council

A public authority may adopt and publish a policy governing a statutory discretion, but it must remain willing to consider exceptional circumstances and must not apply the policy inflexibly. Regulation 26 of the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2000 required a policy change to be published and not implemented for one month. Implementing the change immediately was unlawful. However, the underlying discretion under regulation 8 remained, and the authority could depart from its existing policy in an exceptional case by applying the statutory criteria of workability, affordability and reasonableness. An estoppel or agreement could not confer a statutory power which the authority lacked. No effective remedy was granted because the authority would inevitably have reached the same decision lawfully.

Mr Chapman appealed under section 151(4) of the Pension Schemes Act 1993 against the Pensions Ombudsman’s dismissal of his complaint. He had taken early retirement from the Council during a restructuring exercise. The Council had previously published a policy of awarding credited periods under regulation 8 of the 2000 Regulations, but resolved on 17 October 2001 to abandon that policy and apply the change to current applications. The policy was implemented before the one-month period required by regulation 26(3) had expired.

The central issues were whether regulation 26 required the previous policy to continue to be applied until the new policy took effect, whether the Council had any residual discretion to depart from its policy, and what remedy followed from the unlawful implementation.

1. The appeal succeeded on the legal issue that the Council had unlawfully implemented its new policy before the expiry of the one-month period required by regulation 26(3). The Council’s decision of 17 October 2001 was the implementation of a new policy, not merely an isolated departure from the former policy.

2. The statutory scheme did not require the Council to apply its published policy inflexibly in every case. Consistently with British Oxygen Co. Ltd v Minister of Technology [1971] AC 610 and R v Home Secretary, ex p. Venables [1998] AC 407, a policy governing a discretion was lawful only if the authority remained willing to consider relevant circumstances and depart from the policy where appropriate.

3. Any departure from the existing policy was likely to require exceptional circumstances. The relevant considerations were those in regulation 26(4): whether the policy was workable, affordable and reasonable having regard to foreseeable costs. Once the Council had concluded that the existing policy was financially unjustifiable and should be abandoned, it would have been entitled to reach the same conclusion for the eight current applications.

4. The estoppel argument failed. Amalgamation Investment and Property Co. Ltd. v Texas Commerce International Bank Ltd [1982] QB 84 concerned assumptions underlying transactions and could not apply to confer on a public authority a power which the statute did not give it.

5. Although the Ombudsman had not properly analysed the issue as one of statutory legality, the appropriate remedy under section 151(2) was not to require reconsideration. The relevant circumstances could not realistically be reconstructed, and the Council, properly directed, would have reached the same conclusion. The appeal therefore failed.

The judgment concerned an appeal to the High Court from a determination of the Pensions Ombudsman. No citation for the Ombudsman’s determination is stated in the judgment.