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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> D2M Solutions Ltd v Secretary of State for Communities and Local Government [2017] EWHC 3409 (Admin) (21 December 2017) URL: https://www.bailii.org/ew/cases/EWHC/Admin/2017/3409.html Cite as: [2017] EWHC 3409 (Admin), [2017] WLR(D) 859, [2018] PTSR 1125 |
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QUEEN'S BENCH DIVISION
PLANNING COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
D2M Solutions Ltd |
Claimant |
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- and - |
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Secretary of State for Communities and Local Government |
Defendant |
____________________
Miss Isabella Tafur (instructed by Government Legal Department) for the Defendant
Hearing date: 23rd November, 2017
____________________
Crown Copyright ©
Mr Justice Holgate:
Introduction
Factual Background
"PINS guidance on reviewing claims for financial compensation by an ex-gratia payment"
"Where maladministration or poor service has led to injustice or hardship, PINS should offer a range of remedies that aim to return the complainant to the position they would have been in before the error occurred. This range includes, where appropriate, financial compensation by means of an ex-gratia payment for reasonable costs suffered as a result of an acknowledged error or failure by PINS. Such payments do not give rise to liability or a legal obligation but may nonetheless be considered where compelling reasons exist to provide such compensation"
"In line with Treasury guidance on Managing Public Money, such payments are designed to restore the wronged party to the position they would have been in, had things been done correctly. In determining such requests for payment PINS will:
- assess the wasted costs the claimant has demonstrably incurred;
- apply, where appropriate, an interest rate to the sum lost, aimed at restoring complainants to the position they would have been in if the maladministration or error had not occurred;
- apply, if appropriate, an additional "goodwill" payment in acknowledgement of substantial injustice, inconvenience, hardship or distress caused as a result of our error."
"The ex-gratia process is designed to cover situations where appellants have incurred additional expenses as a result of a PINS error. The most common examples are:
- Costs or expenses incurred due to an appeal being re-determined following a successful challenge in the High Court;
- Costs incurred as a result of a procedural error, such as a failure to give the correct details of a site visit, or where an Inspector fails to arrive for a prearranged event;
- Costs incurred in having to make a fresh application to the LPA as an alternative to making a High Court challenge, following an error in a decision;
- Costs incurred in discharging an erroneously imposed condition in the decision with the LPA;
- Costs incurred as a result of having to pursue a complaint about the poor service that led to the claim"
The document states that a request for payment may be made by: -
"Anyone directly affected by an error, and who has incurred wasted costs or expenses as a result, including not only the appellant and the local planning authority but also third parties"
"PINS will consider making a payment only if it is first accepted that we are at fault in some way. There is normally little doubt where the High Court has quashed a decision due to a PINS error and the appeal has to be re-determined.
Where a claimant says, for instance, that they were not advised of a change of site visit date, or that a condition was imposed which did not reflect what had been agreed at an inquiry, and he/she had been put to unnecessary expense, we will consult with the people concerned, including the Inspector if appropriate. Only when we are fully satisfied that we have all relevant information and have established that we were at fault, will we proceed to consider the request."
"The initial claim for a payment will be administrated by PINS Quality Unit, who will advise the claimant within 14 days of receipt of all relevant information, whether the circumstances fall within our agreed criteria for making compensatory payments. The Quality Unit will consider the details of the claim and assess whether an ex gratia payment is appropriate and necessary to remedy the error.
Each case will be decided on its facts. If the Quality Unit is unsure about any aspect of the claim (for example, the level of fees claimed, the work undertaken or the detail included in the submitted invoices), they will write to the claimant requesting further details. Based on the evidence provided, QAU may delete or reduce any part of the claim if, in its reasonable view, it is considered that element cannot be substantiated."
The decision letter dated 4 April 2017
"What falls to be considered through the reassessment of your claim is whether the costs you are seeking to have reimbursed by the Planning Inspectorate by means of an ex gratia payment are proportionate, substantiated, reasonable, and demonstrable in relation to the acknowledged error and the need to determine the remitted appeal. The Planning Inspectorate has been consistent in rejecting costs of claimants that are estimated, optional, unreasonable, or excessive and has only ever considered making a discretionary payment on the basis that such costs have been fully substantiated, are directly related to the acknowledged error, are justified in the public interest, and meet the general principles of its ex gratia scheme, in the absence of any liability, legal obligation or statutory scheme under legislation placed upon the Planning Inspectorate in relation to financial redress"
The letter explained that despite several requests from PINS for supporting evidence to be provided, certain heads of claim were not substantiated and therefore could not be accepted. No challenge is made to that reasoning.
"Testing the veracity of such documents or reports in respect of assessing wasted costs, particularly where loss of profit is cited, is not the purpose of the ex gratia scheme as administered by the Customer Quality team, whose role it is to assess receipts and invoices in support of directly attributable costs arising from an acknowledged error of the Planning Inspectorate. Nor is it the Planning Inspectorate's policy to make ex gratia payments other than in respect of directly attributable, incurred costs.
In that context, I should explain that a claim for loss of earnings does not fall within the remit or general principles of the ex gratia scheme. Whether or not it has been explicitly set out in the superseded scheme or new policy, the Planning Inspectorate's scheme has always been to consider actual costs that are directly related to an acknowledged error. The Planning Inspectorate has been consistent in rejecting claims for loss of earning or loss of profit. In redetermination cases, our guiding principle has been to consider reimbursing costs involved in the reviewing and updating of evidence essential to the reconsideration of the remitted appeal and any additional work undertaken following any relevant policy and legislative changes that occurred from the date the first decision was quashed. Our policy states that ex gratia payments are designed to restore the wronged party to the position they would have been in before the error occurred. The scheme clearly refers throughout to reasonable wasted costs or expenses incurred as a result of an acknowledged error. It does not refer to loss of earnings or loss of profit, since they are not recognised as wasted costs because they are not directly attributable to an Inspector error in decision-making in the same way as, for example, professional fees incurred from needing to revise evidence for a redetermination appeal or the reasonable travel and subsistence expenses associated with attending a further appeal Hearing. Conversely, loss of earnings is posited here as potential future profit which cannot be guaranteed or demonstrated as a direct wasted cost"
"It cannot simply be deduced that except for this error, the appellant would have secured planning permission for the proposed development in January 2015, irrespective of the decision of the second Inspector to grant planning permission. The first Inspector had refused permission having considered the main issues, being the effect of the proposal on the historic environment and residential amenity, as well as the environmental benefit of the renewable energy development and the overall planning balance. It was not a ground of challenge in the claim that the Inspector erred in his reasoning on the main issues and it similarly went untested as to whether the Inspector would have reached the same conclusion on the main issues, had this error in calculation not occurred. Thus, it is possible that permission may still have been refused by the Inspector and it would have been for the High Court to judge whether the Inspector had erred in his reasoning on the main issues in circumstances where such grounds of challenge had been brought. Our revised policy for ex gratia payments has clarified that where the Secretary of State decided, on the basis of legal advice, not to defend a challenge brought and submits to the Court's judgment, we will consider what went wrong and whether an ex gratia payment in respect of the costs of the redetermination is appropriate. There is nothing in the former policy that limits or prohibits us from applying the same principle. It is only accepted that the error caused the appeal to be remitted for reconsideration, therefore, only deliberation of reimbursing reasonable and proportionate additional costs directly arising from the redetermination process fall to be considered. Loss of earnings, as asserted here, is not considered to be a reasonable or proportionate "cost" that can be said to directly arise from the redetermination process."
Ground 1
Legal Principles
HM Treasury – "Managing Public Money"
"As section 4.11 explains, when public sector organisations have caused injustice or hardship because of maladministration or service failure, they should consider:
- providing remedies so that, as far as reasonably possible, they restore the wronged party to the position that they would be in had things been done correctly…"
Remedies may take a variety of forms including financial payments (paragraph A4.14.5).
- "Whether a loss has been caused by failure to pay an entitlement, eg to a grant or benefit.
- Whether someone has faced any additional costs as a result of the action or inaction of a public sector organisation, eg because of delay.
- Whether the process of making the complaint has imposed costs on the person complaining, eg lost earnings or costs of pursuing the complaint.
- The circumstances of the person complaining, eg whether the action or inaction of the public sector organisation has caused knock on effects or hardship
- Whether the damage is likely to persist for some time
- Whether any financial remedy would be taxable when paid to the person complaining
- Any advice from the PHSO."
Interpretation of PINS' ex gratia scheme
i) the "wasted costs" that the claimant has "demonstrably incurred";
ii) where appropriate a rate of interest to be applied to that sum;
iii) if appropriate, an additional "goodwill" payment to acknowledge any substantial injustice, inconvenience, hardships or distress caused as a result of the error.
The expression "wasted costs" is clear. It covers expenditure which has been thrown away or made useless by the error or failure and additional expenditure incurred in order to overcome the effect of the error or failure (but avoiding double counting). The reference to "goodwill" has nothing to do with the term used in accounting or corporate finance referring to a value of a business as a going concern. The phrase "a goodwill payment" indicates a payment referable to a helpful, friendly, kindly or benevolent attitude (Oxford English Dictionary). Accordingly, the section of the document dealing with the determination of the claim does not indicate that payments will be made for loss of earnings or profits. Instead, the scheme is said to cover costs (or expenditure) which have been incurred.
The restoration objective.
Delay in the redetermination of the planning appeal
Failure to consider making an exception to the ex gratia scheme
Conclusions
Article 1 of the First Protocol to the ECHR and Ground 4
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."
"The important distinction is between the present day value of future income (which is not treated by the European court as part of goodwill and a possession) and the present day value of a business which reflects the capacity to earn profits in the future (which may be part of goodwill and a possession). The capacity to earn profits in the future is derived from the reputation that the business enjoys as a result of its past efforts."
The Court of Appeal then decided that contracts which had already been concluded might be referable to "past efforts" and hence the goodwill of the business, but contracts yet to be concluded could not (paragraphs 48-49).
Ground 2
Ground 3
Conclusion