This is the first of our new series of quarterly local government update blogs, which will enable readers specialising in local government law to catch up on the most important cases, issues or developments. This post looks at developments from November 2012 to January 2013, when the most interesting developments have been two recent cases dealing with local government powers.
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The proper exercise of powers (Charles Terence Estates Ltd v Cornwall Council and another  EWCA Civ 1439)
Even where a local authority has statutory power to act in a particular way, its actions may be susceptible to judicial review if it exercises the particular power in a manner that is contrary to the intention of the statute or in a manner that is inconsistent with public law principles.
In this case, the Court of Appeal reversed the High Court’s decision that thirty leases Cornwall Council’s predecessor authorities had entered into with Charles Terence Estates Ltd (CTE) were void and unenforceable. The High Court had held that the statutory power of the authorities to acquire property under section 17 of the Housing Act 1985 had to be construed in the light of the principle that a fiduciary duty was owed to the council taxpayers (which required the authorities to have regard to market rents when agreeing the amount of rent payable to CTE) and by failing to have regard to the duty, the authorities were acting outside their powers and therefore the leases were void and of no effect. The High Court’s ruling, if it had not been overturned by the Court of Appeal, would have allowed the unitary council to extricate itself from a number of expensive leases by invoking a lack of capacity on the part of the predecessor authorities.
Although lawyers for Cornwall Council’s sought to argue that the judgment had considerable significance for public authorities across all areas of law, the Supreme Court in December 2012 refused permission to appeal the Court of Appeal’s decision. It did so on the basis that the application did not raise an arguable point of law of general importance that ought to be considered by the Supreme Court and there was no realistic prospect of successfully appealing the first ground of the Court of Appeal’s decision.
A criminal prosecution cannot be based on an ultra vires action (White and another v South Derbyshire District Council  EWHC 3495 (Admin))
The issue for the High Court here was whether a licensing authority, which had acted ultra vires in granting a licence for a caravan site on land that did not have an express grant of planning permission under the Town and Country Planning Act 1990, could base a criminal prosecution on the unlawfulness of its own actions. The basic principle of English law is that an ultra vires act is void and therefore to be treated as a nullity, even though the act subsequently (as here) may have been relied upon by innocent third parties. The case was not only based on an unusual set of facts but the district council was hampered by the lack of case authority for its assertion to the court that, in prosecuting the owners of the caravan park, it was entitled to rely on the unlawfulness of its own act in granting the licence. Having been convicted in Derby Magistrates’ Court of permitting land to be used for the purposes of a caravan site without having a valid site licence, the appellant licence holders appealed their convictions to the High Court. The High Court agreed with the appellants that, given the district council had based a criminal prosecution on its unlawful act, the prosecution could not succeed and quashed their conviction.
These decisions reinforce the general approach that it is unattractive for a public body to raise its own unlawful actions for its own benefit, whether that be defending a claim made against it under an agreement that has been entered into or bringing proceedings alleging a criminal act. If it seeks to avoid a contract that has been lawfully entered into on public law grounds, local authorities must remember that the burden is extremely high and the balance that the courts will apply is between protecting the commercial contracts that a local authority freely enters into and ensuring that local authorities act lawfully and are called to account if they fail to do so. In a similar vein, relying on its own ultra vires act to mount a criminal prosecution is always likely to prove difficult for a local authority.
To see details of all our coverage of legal developments that relate to local government law in the last quarter, see our local government legal updates page.