Dudley Metropolitan Borough Council, R (on the application of) v Secretary of State for Communities and Local Government

Where a public authority has failed to consult fairly at a formative stage, the normal remedy is to quash the resulting decision. The court should refuse a quashing order only where it is inevitable that the same decision would have been made following a lawful and fair procedure. Post-decision willingness to listen, or the authority’s position in adversarial litigation, does not establish that inevitability. The court should not anticipate the consequences of reconsideration, including contingent financial adjustments. In costs matters, a successful claimant may recover only a proportion of its costs where other grounds failed, but the court should generally reflect that result by a proportionate discount rather than issue-by-issue costs orders.

The claimant challenged the Secretary of State’s decision of 19 April 2011. The court had previously found a breach of procedural fairness because the claimant was not consulted about the proposed decision at a formative stage, while rejecting four other grounds of challenge. The present judgment concerned the appropriate remedy, the financial consequences of quashing, costs, and permission to appeal.

1. The decision of 19 April 2011 was quashed. The normal consequence of a breach of the duty to consult fairly is a quashing order because it is for the public authority, not the court, to decide the outcome of a lawful procedure.

2. The exceptional test for refusing relief was whether it was inevitable that the same decision would have been reached after a lawful and fair procedure. That threshold was not met. The Secretary of State’s post-decision conduct, including willingness to consider an exception, did not cure the absence of consultation while the decision-maker’s mind was still open. Nor could the court treat the Secretary of State’s stance in adversarial litigation as conclusive of the outcome on reconsideration.

3. The evidence concerning the financial consequences was potentially incomplete, and the parties might have genuine disputes of interpretation concerning payment calculations and present value. The court therefore refused to order repayment of £9.2 million or otherwise direct interim transfers. The parties could address any resulting accounting consequences, including set-off, and any unresolved restitutionary claim could be brought later.

4. Under Rule 44 of the Civil Procedure Rules 1998, the claimant’s partial success had to be reflected in the costs order, but the defendant’s success on other grounds also required recognition. The appropriate course was a proportionate reduction rather than an issue-by-issue order. The defendant was ordered to pay 50 per cent of the claimant’s costs.

5. The court refused permission to appeal on the substantive legitimate expectation and section 149 points. An appeal is against the order, not the reasons: Lake v Lake. In any event, the court considered that there were no real prospects of success or other compelling reason for an appeal.