First Real Estates (UK) Ltd v Birmingham City Council

Judicial review is not generally available to challenge a public authority’s exercise of a contractual power merely because the authority is performing statutory functions. The relevant question is whether public law defines the power being challenged. A decision to remove a supplier from a public list may be reviewable where the list and the authority’s power derive from public law. That principle does not extend to ending a series of private licence arrangements with a supplier that has no public status.

A legitimate expectation may arise from a public authority’s clear representation, but relief requires reliance or another consequence warranting intervention. An express contractual term permitting termination on written notice at any time is not readily displaced by an implied requirement of reasonable notice.

First Real Estates supplied properties to Birmingham City Council for use as temporary accommodation for homeless persons. The parties had entered into a series of individual licence agreements, each terminable by either party on written notice at any time. There was no overarching written agreement or approved-supplier status.

Following complaints about the condition and safety of properties and the conduct of FRE, the Council stopped making placements and decided to begin rehousing occupants. FRE challenged the decision by judicial review, alleging unfairness, unreasonableness and legitimate expectation. It also sought to advance an alternative contractual claim based on an implied overarching agreement and reasonable notice.

The issues were whether the decision was amenable to judicial review, whether a legitimate expectation had arisen, and whether FRE had a viable contractual claim.

1. The claim was dismissed. The Council’s decision of 16 June 2008 was declared lawful. No private-law damages claim arising from that decision could succeed, and FRE was ordered to pay the Council’s costs.
2. The relationship between the parties consisted of a series of individual licence agreements, not an overarching agreement under which FRE had a continuing position as the Council’s agent or service provider. The Council had not undertaken to continue using FRE’s properties or to follow a particular termination procedure.
3. Judicial review was not excluded merely because the dispute concerned a network of contractual decisions. However, the relevant distinction was whether the power being challenged was defined by public law or private law. Here, the Council’s power to enter into and terminate individual licences was contractual. A claimant could not convert a claim for breach of contract into a public-law claim simply because the defendant was a public body.
4. Section 19(9) of the Local Government Act 1988 did not create a right to judicial review. It merely confirmed that judicial review was not excluded by the statutory provisions concerning non-commercial considerations.
5. Cases concerning removal from an approved list of contractors were distinguishable. Such decisions involved a public-law power, a public status previously enjoyed by the contractor and a public interest in the list. FRE had no comparable status or listing.
6. The Council’s letter of 21 May 2008 created a limited legitimate expectation that, if FRE carried out remedial works identified by inspection, the Council would consider the relevant property suitable for use. FRE did not rely on that expectation or identify expenditure incurred in reliance on it. It therefore provided no basis for relief.
7. The express licence term permitting termination on written notice at any time excluded an implied term requiring reasonable or three months’ notice. The arrangement necessarily required flexibility because occupants might require or leave accommodation at short notice. In any event, the Council’s decision was not unreasonable in light of the substantial history of complaints and the warnings already given to FRE.