Littlehampton Harbour Board v Arun District Council

Section 19 of the West Sussex County Council Act 1972 is not confined to modest budgetary shortfalls or operational expenditure. It may cover any lawful expenditure for the harbour board’s statutory purposes, including capital expenditure, provided the statutory financial safeguards are observed.

The harbour board must operate on business principles, use available reserves before seeking council contributions, and balance expenditure against the councils’ fiduciary duties to taxpayers. A council is not required to contribute irrespective of those constraints. In judicial review, the legality of a decision is assessed by the reasons given when it was made. A decision cannot generally be defended by ex post facto reasoning.

Littlehampton Harbour Board applied for judicial review of Arun District Council’s refusal to contribute under section 19 of the West Sussex County Council Act 1972 towards infrastructure investigations and design work described as Future Project Needs or the Harbour Entrance Renewal Scheme.

The Council considered that section 19 was limited to projected operational income shortfalls and could not require it to fund substantial capital expenditure. The Board argued that the provision covered expenditure necessary to discharge its statutory harbour duties, subject to the Act’s financial safeguards. The central issue was whether the requested infrastructure expenditure fell within section 19.

1. Claim succeeded. The Council’s decision was quashed. The Board was to submit an up-to-date request, to which the Council would be required to respond. The judge’s provisional view was that a declaration was unnecessary.
2. Applying ordinary principles of statutory construction and reading the West Sussex County Council Act 1972 as a whole, section 19(1) requires an estimate of money needed for expenditure exceeding income in the next financial year. The term expenditure contains no express or implied exclusion of capital expenditure.
3. Capital expenditure may therefore fall within section 19 where it is lawful expenditure for the Board’s statutory purposes, including maintaining the harbour undertaking. The availability of borrowing powers under article 3 of the Littlehampton Harbour Revision Order 1986 does not remove that possibility.
4. The statutory scheme imposes important safeguards. The Board must operate commercially and exercise financial discipline under section 21. Relevant reserves must be used before contributions are sought under section 19, and the Board must repay any excess contributions under section 19(3). Sections 18 and 19 are subject to section 21 and the principles in Bromley LBC v Greater London Council.
5. Those principles require ordinary business operation and a proper balance between the interests of taxpayers and service users. They provide limits on requests for contributions, but do not justify a categorical exclusion of capital expenditure.
6. The Council’s decision was based on the erroneous construction that section 19 could never cover capital expenditure. Its later reliance on alleged breaches of section 21 and the Bromley principles was not part of the decision-making process and constituted impermissible ex post facto reasoning. In any event, the later, reduced request for investigatory works had not been shown to breach those duties.

This was a first-instance judicial review. Permission was granted by James Strachan KC, sitting as a Deputy High Court Judge, on 10 June 2024. The claim was determined by the High Court (Administrative Court).