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England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Nestwood Homes Developments Ltd, R (On the Application Of) v South Holland District Council  EWHC 863 (Admin) (25 March 2014)
Cite as:  EWHC 863 (Admin)
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| The Queen
on the application of
Nestwood Homes Developments Limited
|- and -
|South Holland District Council
Mr Peter Oldham QC (instructed by Legal Services Lincs) for the Defendant
Hearing date: 28/1/2014
Crown Copyright ©
Mr Justice Sales:
i) The Council failed to provide adequate reasons for its decision, particularly in view of the availability of a general reserve maintained in the Council's accounts;
ii) The Council gave excessive weight to the issue of the affordability of a payment in line with the LGO's recommendations and its impact on the Council's finances and failed to take relevant considerations properly into account;
iii) The Council took the decision in an unfair way, in that it did not afford Nestwood an opportunity to make oral or written representations in relation to the decision it had to take how to respond to the LGO's recommendation on remedy;
iv) The Council acted in a way which gave the appearance of predetermination and unfairness in the sense of having a mind closed to the merits of the decision in question;
v) The decision was irrational and perverse.
i) referred to the Council's Medium Term Financial Plan, approved in March 2012;
ii) highlighted "the significant financial challenges facing the Council", against the background of reductions in government funding of about 28% in the four year period covered by the Government's Comprehensive Spending Review of 2010;
iii) stated that by making efficiencies in the way it worked the Council had managed to balance its budget in the current year, but that future years would require more drastic action to sustain its financial position. By 2013/14 the Council would need to make additional savings of £966,000 and there would be additional pressure to cut costs in later years;
iv) reviewed the Council's constrained capital spending programme and set out the Council's reserves earmarked for particular purposes. It stated that in addition it held a General Fund balance of £1.9 million as at 31 March 2012, which was held to ensure that the Council maintained adequate working balances to meet short term variations against budgeted expenditure and income and fluctuations in the demands on Council services. In that regard, it stated:
"When the new rates retention system comes into effect in April 2013, councils will have to manage the impacts of changes to their business rates income within their own budgets. The localisation of council tax benefit will also introduce a new source of volatility. The uncertainty is making it very difficult for councils to plan medium term financial strategies, therefore it is essential for the Council to maintain its reserves as a safeguard against future volatility."
v) reviewed the other resources available to the Council, stating that as a final resort the Council could consider raising Council Tax to meet the compensation claim. Any proposed increase above 3.5% would trigger a public referendum. The Council had a low Council Tax level and small tax base, so even a 3.5% increase would generate only £156,000.
"You are aware of the report which went to Council for its meeting on 11th April 2012. You raised no objection to it. We believe that it refers to your clients' concerns, as expressed in your correspondence, appropriately. We attach a copy of the report to Council on 25th July 2012. Again, we believe that it refers to your clients' concerns appropriately. It would be unusual for all correspondence relating to Council business to be put before members and it was not necessary for your letters to be appended."
"Whilst Councillor Przyszlak would not seek to dispute the recommendations of the Ombudsman in any way or to question the fairness or appropriateness of the process by which the Ombudsman reached any decision, he did believe that as members of the Council they should take into account the affordability of any payments in relation to the Council's ability to provide its services to those who pay their Council tax, to the Council now and in the future. He therefore suggested it to be fair and proportionate on the following basis: That the Council would need to make significant efficiencies in order to balance its budgets in the coming years. In proposing this recommendation he had considered the reserves held by the Council and how they were earmarked to meet the future spending requirements of the Council."
The Grounds of challenge
(a) Inadequate reasons
(b) Excessive weight given to affordability and failure to consider relevant considerations