Bembridge Harbour Trust, R (on the application of) v Bembridge Harbour Improvement Company Ltd

A private company exercising statutory harbour functions is amenable to judicial review, but the court must respect the statutory allocation of supervisory responsibilities. Where Parliament has equipped a minister to receive accounts, investigate compliance and appoint an auditor, the court should not itself audit disputed accounts in judicial review proceedings.

A statutory harbour authority established as a private company retains the ordinary liberty to manage indebtedness, investment and profitability unless the statute imposes a contrary restriction. A general reference to the public interest does not justify implying additional limits on ordinary business decisions beyond the express statutory duties.

The claimant, a charitable trust concerned with Bembridge Harbour, sought judicial review of the defendant private company, which exercised statutory harbour authority functions under the Pier and Harbour Order (Bembridge Harbour) Confirmation Act 1963.

Permission was granted on a challenge concerning the application of surplus revenue and was later amended to include alleged ultra vires loans, security and departure from the statutory purpose. The claimant relied principally on the defendant’s 2019/20 accounts. The central issues were whether the accounts established a breach of the statutory surplus-revenue duty, whether the defendant had acted beyond its powers, and what role the reviewing court should perform in resolving the underlying accounting dispute.

1. The claim was dismissed. The court had no sufficient evidential basis to find that the defendant had made the alleged loans or improperly provided security. The available evidence supported the conclusion that part of the surplus was invested in harbour assets and the balance reduced accumulated net current liabilities.
2. The statutory scheme had to be read as a whole. It allocated complementary functions to the harbour authority and the minister, including receipt of annual accounts, investigation of complaints, appointment of an auditor and the holding of inquiries. Those ministerial functions constituted the primary statutory mechanism for assuring compliance with the authority’s financial duties.
3. A reviewing court may supervise the minister’s exercise or non-exercise of those functions, but should not displace them by undertaking its own forensic audit of disputed accounts. Questions of statutory meaning remain for the court, but factual questions about revenue, expenses and application of surplus should ordinarily be established through the statutory investigative mechanism.
4. The defendant’s status as a private company was material. Subject to the statutory scheme and ministerial oversight, it was entitled to manage its indebtedness, investment, profitability and growth in the ordinary way. The statute contained no express or implied restriction preventing medium-term financial management across accounting years.
5. The statutory reference to the public interest did not support an implied general duty to subordinate ordinary commercial decisions to an external public-interest standard. R(oao) Akester & Melanaphy v DEFRA & Wightlink was confined to the proposition that express statutory public duties prevail over inconsistent commercial considerations; it did not establish a broader restriction on ordinary company management.
6. On the accepted factual basis, reducing net current liabilities was capable of falling within the statutory scheme, either as application towards the relevant harbour undertaking or through the calculation of expenses properly chargeable to revenue. No breach of statutory duty or ultra vires conduct was established.

This was a first-instance judicial review in the Administrative Court. The judgment does not state any prior appellate decision in the present proceedings.