Bhatt Murphy (a firm), R (on the application of) v The Independent Assessor

A public authority may ordinarily change policy, but prior conduct can make a change unfair enough to amount to an abuse of power. A clear assurance of notice or consultation will ordinarily require consultation. Without such an assurance, a procedural expectation arises only exceptionally, where the prior policy has a pressing and focussed impact on a particular person or group with substantial grounds to expect its continued benefit.

A substantive expectation requires a specific undertaking directed to an individual or defined group. The mere existence of a policy gives no enforceable expectation that it will continue. Transitional arrangements for a lawful policy change need not preserve every former benefit if they fairly cushion legitimate reliance.

The appellants challenged decisions announced on 19 April 2006 concerning compensation for miscarriages of justice. The Secretary of State withdrew the discretionary compensation scheme for new applications. The Independent Assessor also reduced recoverable legal costs for compensation applications to Legal Help rates.

Three prospective applicants had instructed solicitors before the announcement but had not submitted discretionary-scheme applications. Six specialist firms had existing retainers based on private-client charging rates. Their judicial-review applications were dismissed by the Divisional Court on 26 June 2007.

The appeals concerned whether the withdrawal, the costs change, or the transitional arrangements breached procedural or substantive legitimate expectations.

1. The appeals were dismissed. Laws LJ's reasoning, with which the Master of the Rolls agreed, established that neither the Cabinet Code nor the Home Office website gave an unequivocal promise that every policy change would be preceded by consultation. The materials described how consultation would be conducted when chosen; they did not create a universal duty to consult.
2. A procedural legitimate expectation arising without a prior assurance is exceptional. It requires a pressing and focussed impact upon particular persons who have substantial grounds to expect the policy's continued benefit. The appellants' proposed rule would require consultation on a vast range of policy changes and would improperly judicialise political decision-making. Their circumstances did not meet the exceptional standard.
3. A substantive legitimate expectation requires a specific undertaking directed to an identified individual or group. The existence of a discretionary policy, without a promise as to its future duration or terms, creates only an ordinary factual expectation that it will continue until rational grounds for change arise. It is insufficient for judicial enforcement.
4. The solicitors were not compelled to continue unremunerative retainers after the costs change. They could terminate on reasonable notice, and the transitional arrangements permitted representations for costs above Legal Help rates in appropriate cases. The arrangements could have been more generous, but were not unfair or an abuse of power.
5. Sedley LJ agreed that the appeals failed. He added that a policy beneficiary may expect that legitimate reliance will not be unfairly frustrated by the terms of a policy change; in his view, the transitional arrangements sufficiently protected that reliance. The Master of the Rolls expressed no view on any difference between that approach and Laws LJ's taxonomy.

• Court of Appeal (Civil Division) Dismissed the appeals in [2008] EWCA Civ 755.
• Divisional Court (Administrative Court) Dismissed the judicial-review applications on 26 June 2007. No citation for that decision is stated in the judgment.