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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 >> Scrivens v Ethical Standards Officer [2005] EWHC 529 (Admin) (11 April 2005) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2005/529.html Cite as: [2005] EWHC 529 (Admin)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		11 April 2005

Mr Justice Stanley Burnton:

Introduction

1. This is an appeal, pursuant to section 79(15) of the Local Government Act 2000 ("the Act"), by Mr Victor Scrivens against two findings made against him by the Adjudication Panel for England ("the Panel") in the decision of its case tribunal ("the tribunal") dated 7 December 2004. The tribunal found that Mr Scrivens had failed to comply with the code of conduct ("the code") of Farnham Town Council ("the Council") by failing on one occasion to declare a prejudicial interest and on another to declare a personal interest. The tribunal ordered that he be suspended for a period of 4 months.
2. The appeal raises an important issue as to the correct test to be applied in determining whether a councillor has failed to comply with the provisions of the code in relation to personal and prejudicial interests in matters considered by their authority.
3. As set out in the Appellant's skeleton argument, the issue is whether, in determining whether a councillor has failed to comply with the requirements of the code as regards personal and prejudicial interests, the proper test to be applied by a case tribunal of the Adjudication Panel is:

(a) whether the councillor, on the information available to him on the occasion in question, could rationally have taken the view he did as to whether he had a personal or (if so) prejudicial interest in the matter under consideration; or

(b) whether, viewed objectively, the councillor had a personal or a prejudicial interest in the matter.

4. In summary, the Appellant contends that a councillor does not fail to comply with the code if he reasonably but mistakenly concludes that he does not have a personal interest or prejudicial interest, as the case may be, in a matter considered by his authority, and as a result does not take the action required by paragraphs 8 and 10 of the code. (It is, I think, implicit in Mr Nardell's formulation that the member not only could rationally have considered that he had no personal or prejudicial interest, but also that he in fact concluded that he had no such interest.)
5. The tribunal held that the test is entirely objective: does the councillor have a personal or a prejudicial interest? If he does, he infringes the code if, in the case of a personal interest, he fails to disclose it as required by paragraph 8 of the code, or if, in the case of a prejudicial interest, he fails to withdraw from the meeting at which the matter is considered, as required by paragraph 10, or seeks improperly to influence a decision about the matter. It is irrelevant, on this test, whether the member honestly and reasonably considered that he had no relevant interest.
6. The Respondent contends that the tribunal correctly interpreted and applied the code.
7. Mr Nardell did not contend that, if the tribunal applied the correct test, this Court should interfere with its findings of breaches of the code. Similarly, he did not suggest that if Mr Scrivens was guilty of the breaches of the code found by the tribunal, its decision to suspend him for a period of four months was inappropriate. It follows that the only question on this appeal is whether the tribunal applied the correct legal test.

The facts

8. The facts of the present case are irrelevant to the question of law raised by this appeal. I summarise them in fairness to Mr Scrivens, because on any basis his infringements were at the lower end of the spectrum of seriousness, and the impression might otherwise be given that his infringements were more serious than in fact they were.
9. The Council is a parish council in the area of Waverley Borough Council in Surrey. The Appellant was elected a member of the Council in June 1994. He is also a member of Waverley Borough Council.
10. The Council adopted the model code of conduct for parish councils, referred to below, on 7 March 2002.
11. In summary, the allegations against the Appellant before the tribunal were:

(a) The NFRC allegation.

A meeting of the Council's Amenities Committee on 23 January 2003 considered a funding application by the New Farnham Repertory Company ("NFRC"). The Appellant declared a personal interest, but the Ethical Standards Officer ("the ESO") alleged that he failed to comply with paragraph 10 of the code, set out below, since he should also have declared a prejudicial interest and withdrawn from the meeting. The Appellant's interest consisted of his previously having hired out costumes to NFRC through his theatrical clothes hire business, called "Measure for Measure", at cost, and allowing them box office space in his shop free of charge.

(b) The Church allegation.

A meeting of the Finance and General Purposes Group on 20 February 2003 considered an application by St. Andrew's Parish Church, Farnham, for a grant for work to make the premises accessible by disabled members of the public. The ESO alleged that the Appellant failed to comply with paragraph 8 of the code (see below) by omitting to declare a personal interest. The Appellant was a member of the congregation. The alleged interest consisted of his having, until recently, been a member of the "Friends of St. Andrews", and his having accepted appointment as an honorary sidesman (a church helper who directs people to their seats and takes the collection).

(c) The Plans Panel allegation.

A meeting of the Plans Panel on 13 March 2003 considered, on behalf of the Council as a statutory consultee, an application made to Waverley Borough Council for variation of a planning condition relating to 22 Downing Street, Farnham. The ESO alleged that the Appellant failed to comply with paragraphs 8 and 10 of the code by declaring neither a personal nor a prejudicial interest. The alleged interest arose because a complaint had previously been made to the Board about conduct of the appellant relating to those premises on an earlier occasion. That complaint related partly to an alleged altercation with an individual who was not the occupier about parking outside the building, and partly to an allegation that inquiries made by the Appellant shortly afterwards of officers of Waverley Borough Council, about a possible breach of listed building controls, amounted to a vendetta against the occupier. That complaint had been dismissed. In particular the ESO who dealt with that matter had found that the Appellant's inquiries were part of the proper performance of his public office.

12. The case tribunal hearing took place on 9 September 2004 before a legally qualified Chairwoman, Ms. Melanie Carter, and two members. Both the ESO and the Appellant were represented by counsel. The tribunal made findings of fact and heard and determined submissions on issues of law, including the question of the correct test to be applied to the issue whether a member had failed to comply with the code.
13. In relation to the NFRC allegation, the tribunal held that Mr Scrivens had, and should have declared, a prejudicial interest and withdrawn. It found no breach of the code in relation to the Church allegation. On the Plans Panel allegation, it found that he had, and should have declared, a personal but not a prejudicial interest. On 7 December 2004 the tribunal decided to suspend him from the Council for a period of four months. Its formal findings and the penalty are recorded in its Notice of Decision; its findings of fact, and its reasons for its findings on breach of the code, are fully and clearly set out in its Full Decision dated 7 December 2004.

The legislative framework

14. The background to the legislation was summarised by Simon Brown LJ in his judgment in R (Richardson) v North Yorkshire County Council [2003] EWCA Civ 1860, [2004] 1 WLR 1920, at [45] to [54], and it is unnecessary for me to set it out. That case concerned the code of conduct for a county council rather than a parish council.
15. Part III of the Act provided a new statutory framework for governing the conduct of members and employees of local authorities. Section 49(1) provides that the Secretary of State "may by order specify the principles which are to govern the conduct of members ... of relevant authorities in England". Section 50(1) empowers him by order to "issue a model code as regards the conduct which is expected of members ... of relevant authorities in England". By section 50(4), a model code must be consistent with the principles specified in an order under section 49(1) and may include provisions which are mandatory and provisions which are optional. Section 81, so far as material, is as follows:

(1) The monitoring officer of each relevant authority must establish and maintain a register of interests of the members and co-opted members of the authority.

(2) The mandatory provisions of the model code applicable to each relevant authority ("the mandatory provisions") must require the members and co-opted members of each authority to register in that authority's register maintained under subsection (1) such financial and other interests as are specified in the mandatory provisions.

(3) The mandatory provisions must also-

(a) require any member or co-opted member of a relevant authority who has an interest specified in the mandatory provisions under subsection (2) to disclose that interest before taking part in any business of the authority relating to that interest,

(b) make provision for preventing or restricting the participation of a member or co-opted member of a relevant authority in any business of the authority to which an interest disclosed under paragraph (a) relates.

(4) Any participation by a member or co-opted member of a relevant authority in any business which is prohibited by the mandatory provisions is not a failure to comply with the authority's code of conduct if the member or co-opted member has acted in accordance with a dispensation from the prohibition granted by the authority's standards committee in accordance with regulations made under subsection (5).

(5) The Secretary of State may prescribe in regulations the circumstances in which standards committees may grant dispensation under subsection (4).

16. The Secretary of State specified the principles that are to govern the conduct of members of relevant authorities in the Relevant Authorities (General Principles) Order 2001. The only principle relevant to the present case is principle 2, headed "Honesty and Integrity":

Members should not place themselves in situations where their honesty and integrity may be questioned, should not behave improperly and should on all occasions avoid the appearance of such behaviour.

17. The model code of conduct for parish councils was issued by the Parish Councils (Model Code of Conduct) Order 2001, and is contained in the Schedule to that Order. Article 2(2) of the Order stipulated that all the provisions of the model code are mandatory. The most relevant provisions of the code are paragraphs 1 to 10:

Part 1

General Provisions

1(1) A member must observe the authority's code of conduct whenever he--

(a) conducts the business of the authority;

(b) conducts the business of the office to which he has been elected or appointed; or

(c) acts as a representative of the authority,

and references to a member's official capacity shall be construed accordingly.

…

General Obligations

2. A member must—

(a) promote equality by not discriminating unlawfully against any person;

(b) treat others with respect; and

(c) not do anything which compromises or which is likely to compromise the impartiality of those who work for, or on behalf of, the authority.

3. A member must not—

(a) disclose information given to him in confidence by anyone, or information acquired which he believes is of a confidential nature, without the consent of a person authorised to give it, or unless he is required by law to do so; nor

(b) prevent another person from gaining access to information to which that person is entitled by law.

4. A member must not in his official capacity, or any other circumstance, conduct himself in a manner which could reasonably be regarded as bringing his office or authority into disrepute.

5. A member—

(a) must not in his official capacity, or any other circumstance, use his position as a member improperly to confer on or secure for himself or any other person, an advantage or disadvantage; and

(b) must, when using or authorising the use by others of the resources of the authority—

(i) act in accordance with the authority's requirements; and

(ii) ensure that such resources are not used for political purposes unless that use could reasonably be regarded as likely to facilitate, or be conductive to, the discharge of the functions of the authority or of the office to which the member has been elected or appointed.

6 A member must, if he becomes aware of any conduct by another member which he reasonably believes involves a failure to comply with the authority's code of conduct, make a written allegation to that effect to the Standards Board for England as soon as it is practicable for him to do so.

Part 2

INTERESTS

Personal Interests

7—(1) A member must regard himself as having a personal interest in any matter if the matter relates to an interest in respect of which notification must be given under paragraphs 12 and 13 below, or if a decision upon it might reasonably be regarded as affecting to a greater extent than other council tax payers, ratepayers, or inhabitants of the authority's area, the well-being or financial position of himself, a relative or a friend…

Disclosure of Personal Interests

8. A member with a personal interest in a matter who attends a meeting of the authority at which the matter is considered must disclose to that meeting the existence and nature of that interest at the commencement of that consideration, or when the interest becomes apparent.

Prejudicial Interests

9-- (1)  Subject to sub-paragraph (2) below, a member with a personal interest in a matter also has a prejudicial interest in that matter if the interest is one which a member of the public with knowledge of the relevant facts would reasonably regard as so significant that it is likely to prejudice the member's judgement of the public interest.

…

Participation in Relation to Disclosed Interests

10. A member with a prejudicial interest in any matter must—

(a) withdraw from the room or chamber where a meeting is being held whenever it becomes apparent that the matter is being considered at that meeting, unless he has obtained a dispensation from the standards committee of the responsible authority; and

(b) not seek improperly to influence a decision about that matter.

18. Section 51 of the Act imposes on a relevant authority, including a parish council, a duty to adopt a code of conduct incorporating, and otherwise consistent with, the provisions of the model code. By section 52, a member of a relevant authority must give to the authority a written undertaking to observe its code of conduct. Every relevant authority except a parish or community council must establish a standards committee; in the case of a parish or community council, the standards committee of its district council acts as its standards committee. The general functions of a standards committee are laid down by section 54:

(1) The general functions of a standards committee of a relevant authority are –

(a) promoting and maintaining high standards of conduct by the members and co-opted members of the authority, and

(b) assisting members and co-opted members of the authority to observe the authority's code of conduct.

19. Investigations into alleged infringements of the code of conduct are the subject of Chapter 2 of Part 3 of the Act. Section 57 provides for the creation of the Standards Board for England which, in exercising its functions, "must have regard to the need to promote and maintain high standards of conduct by members and co-opted members of relevant authorities in England". Written allegations of breaches of the code of conduct are investigated by ethical standards officers appointed by the Standards Board for England. The purpose of the investigation is to determine which of the findings mentioned in section 59 (4) are appropriate. Those findings are:

(a) that there is no evidence of any failure to comply with code of conduct of the relevant authority concerned.

(b) that no action needs to be taken in respect of the matters which are the subject of investigation.

(c) that the matters which are the subject of investigation should be referred to the monitoring officer of the relevant authority concerned, or

(d) that the matters which are the subject of the investigation should be referred to the President of the Adjudication Panel for England for adjudication by a tribunal falling within section 76 (1).

20. In the present case the ethical standards officer determined that the matters investigated by him should be referred under paragraph (d). The powers of such a tribunal, called a case tribunal, are contained in sections 79 and 80, of which the former is most relevant:

79 Decisions of case tribunals

(1) A case tribunal which adjudicates on any matter must decide whether or not any person to which that matter relates has failed to comply with the code of conduct of the relevant authority concerned.

(2) Where a case tribunal decides that a person has not failed to comply with the code of conduct of the relevant authority concerned, it must give notice to that effect to the standards committee of the relevant authority concerned.

(3) Where a case tribunal decides that a person has failed to comply with the code of conduct of the relevant authority concerned, it must decide whether the nature of failure is such that the person should be suspended or disqualified in accordance with subsection (4).

(4) A person may be-

(a) suspended or partially suspended from being a member or co-opted member of the relevant authority concerned, or

(b) disqualified for being, or becoming (whether by election or otherwise), a member of that or any other relevant authority.

(5) Where a case tribunal makes such a decision as is mentioned in subsection (4)(a), it must decide the period for which the person should be suspended or partially suspended (which must not exceed one year or, if shorter, the remainder of the person's term of office).

(6) Where a case tribunal makes such a decision as is mentioned in subsection (4)(b), it must decide the period for which the person should be disqualified (which must not exceed five years).

(7) Where a case tribunal decides that a person has failed to comply with the code of conduct of the relevant authority concerned but should not be suspended or disqualified as mentioned in subsection (4), it must give notice to the standards committee of the relevant authority concerned-

(a) stating that the person has failed to comply with that code of conduct, and

(b) specifying the details of that failure.

….

(15) Where a case tribunal decides under this section that a person has failed to comply with the code of conduct of the relevant authority concerned, that person may appeal to the High Court against that decision, or any other decision under this section which relates to him.

21. The Standards Board for England has published a Guide to Part 3 of the Act and a document giving guidance on the registration and declaration of members' interests, gifts and hospitality. I shall have to refer to the first of those documents below.

The parties' submissions

22. On behalf of Mr Scrivens, Mr Nardell submitted:

(a) The subjective (subject to the test of rationality) test for a personal and for a prejudicial interest is consistent with the wording of the Act, of the code of conduct, and the guidance published by the Standards Board for England.

(b) That test accords with principle. The decision whether a member has a personal or a prejudicial interest must be taken in the first place by the member himself. His or her honest decision should be valid and lawful unless it irrational: that is the normal (i.e. the Wednesbury) test for impugning a decision made by a person exercising public functions.

(c) The Act provides for penalties for infringement. The Court should lean against a construction of the code that would lead to the penalisation of a member who has decided honestly and reasonably that he does not have a personal or a prejudicial interest.

(d) While a subjective test would be different from that applied in cases in which a third party contends that a decision of a public body will be or has been affected by an appearance of bias on the part of the decision maker, that test is applied for a different purpose and is not applicable in the present context.

(e) In any event, the issue is governed by the authority of the decision of the Court of Appeal in Richardson, which I, like the tribunal, am bound to follow.

23. On behalf of the ESO, Mr Grodzinski submitted:

(a) An objective test was required by the terms of the Act and the code.

(b) The subjective test was inconsistent with the express object of Part 3 of the Act, namely the promotion and maintenance of high standards of conduct by members of relevant authorities.

(c) The objectives of the Act and the code require that a member who has infringed the code should be liable to the measures provided for in the Act. Those measures affect his fulfilment of his role as a representative, but are not penal beyond that. Those measures are not so draconian as to require infringements to be limited to those members who decided dishonestly or unreasonably that they did not have a relevant interest.

(d) The Appellant's construction is inconsistent with the law as to disqualification for bias or the appearance of bias.

(e) The decision of the Court of Appeal in Richardson is not binding on the question before me.

The decision of the tribunal

24. The submissions summarised above reflect those made to the tribunal. Given the narrowness of the issue raised on this appeal, it is sufficient to set out paragraphs 3.7.2 to 3.7.6 of the Full Decision.

3.7.2 The representative of the Respondent drew the attention of the Case Tribunal to the case of R (Richardson & another) v North Yorkshire County Council and others. The Case tribunal did not accept that this case was authority for the propositions set out at paragraph 3.1.6.1 – 3.1.6.3 above. First, the question of how to approach the tribunal's jurisdiction did not appear to have been argued before the court. At its highest, the approach that was asserted to have been taken was obiter dicta (i.e.: not a point at issue and therefore not a binding part of the case).

3.7.3 The Case Tribunal concluded that the Court of Appeal expressed itself at paragraph 76 by reference to irrationality on account of the extreme and obvious nature of the relevant member's prejudicial interest. Indeed, the Case tribunal, reading the case as a whole, noted passages of the judgment of Richards J in the court below, which the Court of Appeal approved, which approached the tribunal's jurisdiction to this question without mentions or signs of an irrationality test (see for instance paragraph 84 (v) of the High Court decision as quoted in paragraph 76 of the Court of Appeal decision).

3.7.4 Finally, the approach said to have been taken by the Court of Appeal in the case of Richardson was entirely appropriate to the supervisory jurisdiction of the Administrative Court – one of the classic grounds of review before the Administrative Court is that a particular decision is irrational and therefore unlawful.

3.7.5 The Case Tribunal, which is a court of first instance, is exercising a jurisdiction of a different nature. It is exercising its powers under section 79(1) of the Local Government Act 2000. Pursuant to that section, it "must decide whether or not any person to which [the] matter relates has failed to comply with the code of conduct". Its role therefore is to consider the facts and then apply those to the wording of the code. As such, in the Case Tribunal's view, the correct approach was for it to make up its own mind according to the tests set out in paragraphs 8 and 10 of the code of conduct, without the constraints of an irrationality test.

3.7.6 Finally on this point, the Case Tribunal did not consider the terms of the Standards Board guidance significant in this respect as that organisation had a responsibility not only to inform Councillors of the law but also to "promote and maintain high standards of conduct" amongst Councillors – sees section 57(4) of the 2000 Act. As such, the wording used in its guidance should not be taken, by the tribunal or Councillors, as necessarily representing the Standards Board's interpretation of the law. In order to promote high standards, the Standards Board would inevitably wish to encourage Councillors to take personal responsibility and to take the lead in considering whether they had a personal or prejudicial interest in a matter.

Discussion

25. It is, I think, important to distinguish two questions. The first is whether a member has a personal or a prejudicial interest. A subjective test, subject to rationality, would mean that a member does not have a personal interest if he reasonably but mistakenly considers that a decision on the matter could not be regarded as affecting his well-being or financial position (or those of the other persons specified in paragraph 7(1) of the code) to a greater extent than other council tax payers etc.. Similarly, a member would not have a prejudicial interest if he reasonably but mistakenly thought that his interest would not be regarded as so significant that it is likely to prejudice his judgment of the public interest.
26. The second question concerns failure to comply with the code. It relates to the mental element required for a finding that a member failed to comply with the code. It can arise only if the test for the existence of a personal or a prejudicial interest is objective. A subjective test (subject to rationality) for infringement would mean that a member who did not declare his personal interest would not have "failed to comply with the code" within the meaning of section 79 of the Act if he reasonably but mistakenly believed that he had no such interest; and he would similarly not have failed to comply with the code if he had a prejudicial interest but reasonably and mistakenly thought that he did not, and therefore did not withdraw from a meeting pursuant to paragraph 10.
27. Mr Nardell's skeleton argument raises the second question, but not the first. His oral submissions were not so clearly confined (hence, for example, his reliance on the passage from the Guide to Part III of the Act issued by the Standards Board for England referred to below), and I shall address both questions.
28. If this matter were free from authority, I should unhesitatingly prefer the submissions of the ESO as to the effect of the code and the definitions of personal and prejudicial interests. Mr Nardell relies on the words in paragraph 6 of the code "A member must regard himself as having a personal interest in any matter if …" as suggesting a subjective test. But there is no trace of subjectivity in the sentence as a whole. The verb "must" means that the member has no choice but to regard himself as having a personal interest if the matter relates to a notifiable interest or if "the decision upon it might reasonably be regarded as affecting to a greater extent than other council tax payers, ratepayers, or the inhabitants of the authority's area, the well-being or financial position of himself" or anyone else specified under paragraph 7. There is nothing in paragraph 9 to indicate that the applicable test is subjective. Furthermore, paragraphs 7 and 9 must be redrafted if a personal or prejudicial interest exists only if the member honestly and reasonably considers that he has one. The alternative, put forward by Mr Nardell, it is to limit the requirement of disclosure in paragraph 8 and the requirement of withdrawal and the prohibition against improper influence in paragraph 10 to cases in which the decision of the member that he had no personal or prejudicial interest is either dishonest or irrational. That requires substantial rewriting of those paragraphs.
29. The other provisions of the code do not support Mr Nardell's submission. None of them, other than paragraph 6, suggests a subjective test for their application or for compliance. Paragraph 4 uses the words "which could reasonably be regarded", but the test it lays down is objective. The express stipulation of a subjective test in paragraph 6 ("which he reasonably believes involves a failure to comply with the authority's code of conduct") militates against the implication of a subjective test where such wording is not used.
30. Mr Nardell suggested that the last 6 words of paragraph 9 of the code support his interpretation. They mean, he submitted, that a personal interest need be disclosed only when it becomes apparent to the member that he has one. But paragraph 8 does not read "or when the interest becomes apparent to the member". The last 6 words were inserted, in my view, to cater for the possibility that it might not be apparent when a matter appears on an agenda or when its discussion begins that a member has a personal interest, but his interest becomes apparent during its discussion. For example, in the course of discussion of a planning application, the chairman or officer might mention that a similar application had been received in respect of a development adjacent to the member's home, and that the decision on that application could not sensibly be treated differently from the application under consideration. At that point it would be apparent, objectively, that the member has a personal and prejudicial interest in the matter under consideration, and he must disclose it and withdraw. That interpretation of paragraph 8 renders it consistent with the wording of paragraph 10, which in my judgment does not provide for the member to withdraw when it becomes apparent to him that the matter in which he has a prejudicial interest is being considered, but when it is objectively apparent that it is being considered.
31. I also think that the terms of paragraph 9(2) do not assist the Appellant. It confers on a member an option not to treat what would otherwise be a prejudicial interest as such in objectively defined circumstances. It is because it confers an option on the member that he may choose to take advantage of, but may choose not to, that it uses the words "A member may regard himself as not having a prejudicial interest", wording which contrasts with the "must" in paragraphs 7(1), 8 and 10.
32. Section 81 of the Act is also relevant. It is clear from paragraph 12 of the code that a member is under a duty to register any financial or other interest specified under that paragraph. The drafting does not suggest that the test for the existence of a registrable interest is other than objective. Section 81 stipulates that the mandatory provisions of the code must require a member who has such an interest to disclose it before taking part in any business of the authority relating to that interest. The section does not qualify that requirement by reference to honest rational belief. Subsection (3)(b) is in mandatory and objective terms. Subsection (4) specifies circumstances in which participation by a member in any business which is prohibited by the code (all of which is mandatory) is not a failure to comply with it. The Appellant seeks to add to those circumstances without any legislative authority. Finally so far as section 81 is concerned, the possibility, where applicable, of dispensation under subsection (4) diminishes the need to be tolerant of the reasonable mistakes of a member. (I should mention that it was not argued before me that the code does not comply with the requirements of section 81.)
33. In my judgment, a subjective test would confer considerable latitude on the conduct of members. It would seriously detract from the express object of the Act and the purpose of the code, namely the promotion and maintenance of high standards of conduct by members. The effect of the Appellant's contention, which is that a member of a local authority may participate with impunity in its consideration of a matter in which a fair-minded person would think that he has a disqualifying prejudicial interest, if the member wrongly but reasonably believes that he does not have such an interest, would be to damage public confidence in the affairs of local authorities. I find nothing in the Act to support the Appellant's contention. In particular, I agree with the view expressed by the tribunal that the drafting of paragraph 9(1) is not suggestive of a subjective test.
34. General Principle 2 indicates that members should not place themselves in situations where their honesty and integrity may be questioned. If a member may have a prejudicial interest in a matter viewed objectively, but may nonetheless participate in a meeting at which the matter is considered if he wrongly but reasonably considers that he does not have such an interest, he does place himself in a situation in which his honesty and integrity may be questioned. General Principle 2 also requires that members should not only not behave improperly but also that they should on all occasions avoid the appearance of such behaviour. The italicised words require an objective test; and a member with a prejudicial interest who wrongly but reasonably thinks he has none and participates in a decision affecting that interest gives the appearance of improper behaviour.
35. The guidance issued by the Standards Board for England states:

Members have to decide first whether or not they have a personal interest in the matter under discussion. They will then have to decide whether that personal interest is also prejudicial. … If they do have a personal interest they must declare it …

This passage does not indicate a subjective test. It is true that in relation to a prejudicial test, the guidance states: "A prejudicial interest is a matter of judgement of each member." That gives some support to Mr Nardell's submission. However, it continues: "If a member has a prejudicial interest then they (sic) must declare what that interest is … and withdraw from the meeting …" That passage does not support the Appellant's case. In any event, the guidance issued by the Standards Board for England cannot affect the correct interpretation of the statutory code.

36. Furthermore, the Appellant's construction has curious consequences and gives rise to practical difficulties and inconsistencies.
37. On his construction of the code, two members with the same interest may come to different but reasonable views as to whether they have a prejudicial interest. Both disclose their interest, which both consider to be personal. One, who rightly considers that his interest is also prejudicial, must withdraw; the other, who wrongly but reasonably believes that he does not, is entitled to remain and to influence the authority's decision. Furthermore, the chairman of the meeting, and the other members of the meeting, or their advisers, who rightly consider that the interest is prejudicial, are presumably powerless to require the second member to withdraw, since he is not infringing the code. In the case of an interest notified pursuant to paragraphs 12 and 13 of the code, such a consequence would be inconsistent with section 81((3)(b) of the Act, which requires the code to "make provision for preventing or restricting the participation of a member or co-opted member of a relevant authority in any business of the authority to which an interest disclosed under paragraph (a) relates."
38. The inconsistency with the law on bias is also important. Decisions of local authorities are liable to be quashed on the ground of bias or the appearance of bias on the part of the decision maker. Decisions to grant or to refuse planning permission are a prime example. The test for the appearance of bias is, as Mr Nardell accepts, indubitably objective: would a fair-minded and informed observer conclude that there was a real possibility of bias? See the opinion of the House of Lords in Porter v Magill [2001] UKHL 67, [2002] 2 AC 357 at [102] to [104]; Lawal v Northern Spirit Ltd [2003] UKHL 35, [2003] ICR 856, at [14] ("Public perception of the possibility of unconscious bias is the key"); and in the context of local authority decisions, Georgiou v London Borough of Enfield [2004] EWHC 779 Admin at [28] to [37]. General Principle 2 is similarly concerned not solely with impropriety but also with the appearance of impropriety. The effect of the Appellant's contention is that a member who wrongly but reasonably considers that he has no prejudicial interest in a matter under consideration may participate in its discussion with impunity, even though the consequence will be that a person adversely affected by the decision would be entitled to have it set aside. That is a consequence to be avoided.
39. It is true that a failure to comply with the code may lead to suspension or disqualification. But these are not criminal penalties: they affect the fulfilment by the member of his official functions. Moreover, these are not necessary consequences: a case tribunal may decide that although a member has failed to comply with the code, he should not be suspended or disqualified: see section 79(7). The fact that a member made an error of judgement, and reasonably considered that he did not have a relevant interest, will be highly material to the question of penalty, and may justify such a decision. The express provision made in section 79(7) is inimical to the Appellant's contention. Parliament would not have expressly provided for the possibility of a finding of infringement of the code but no penalty if an infringement were limited to circumstances in which a member had acted deliberately or irrationally.
40. The high-water mark of the Appellant's case is the decision of the Court of Appeal in Richardson. So far as is relevant, that case concerned a contention by the claimant that he had been wrongfully excluded from a meeting of his council's planning and regulatory functions committee on the ground that he had a prejudicial interest in the planning matter under consideration. Thus the issue for decision was not whether the claimant was liable to a finding that he had infringed the code: it was whether the meeting held without him was lawful. Since he was challenging an alleged decision to exclude him, it is perhaps understandable that the rationality of that decision was considered. Be that as it may, at first instance, [2003] EWHC 764 Admin, Richards J. held that the claimant had a prejudicial interest, and that, indeed, neither he nor the council could reasonably have thought otherwise. He said:

82. Mr McCracken (counsel for the claimant) submits that Mr Richardson did not have a "prejudicial interest" within the meaning of paragraph 10(2) of the code and was therefore not required by paragraph 12(1) to withdraw even if it would otherwise have applied to the situation. He also submits that it was for Mr Richardson to decide whether he had such an interest.

83. The Council clearly understood Mr Richardson to accept that he had a prejudicial interest. He does not appear to have taken issue with the point at the time. In those circumstances, and having regard to my finding that the Council advised rather than instructed him in the matter, I do not think that it is open to him to adopt a different position now.

84. In any event I think it plain that he did have a prejudicial interest and that neither he nor the Council could reasonably have taken a different view.

As mentioned above, the paragraph numbers of the code considered in that case differed from that of the code applicable to parish councils which is the subject of this appeal, but there is no difference of wording.

41. It can be seen that at first instance Mr Richardson's counsel submitted that it was for Mr Richardson to determine whether he had a prejudicial interest, a submission not dissimilar to that advanced in the present appeal. It was however unnecessary for Richards J to decide whether a reasonable but mistaken view that there was no prejudicial interest would disqualify a member, because of his findings of fact that Mr Richardson had accepted at the time that he had such an interest, and that he could not reasonably have taken a different view.
42. In the Court of Appeal, the crucial part of the judgment of Simon Brown LJ, with which the other members of the Court agreed, is paragraph 76. It must, however, be read with his citation from the judgment of Richards J and paragraph 77.

Issue (iii)-Was Mr Richardson properly to be regarded as having a prejudicial interest?

76 The first point to make is that the initial and principal judgment on the question is for the individual councillor himself. This is plain both from the consultation paper and also from several of the provisions in the code itself, for example paragraphs 8(1) and 11(1). But there comes a point at which it would clearly be irrational and therefore unlawful for the councillor to conclude that he does not have a personal interest under paragraph 8(1) or, as the case may be, a prejudicial interest under paragraph 10(1). That point, Richards J below concluded, at para 84, was reached here:

"84. In any event I think it plain that he did have a prejudicial interest and that neither he nor the council could reasonably have taken a different view.

(i) I do not understand it to be in dispute, and I would certainly hold, that he had a 'personal interest' within paragraph 8(1), in that the decision on the planning application (i) related to an interest of which he had to give notice under paragraph 14(f), namely his home in Littlethorpe, and/or (ii) might reasonably be regarded as affecting his well-being and/or financial position to a greater extent than other relevant persons.

(ii) His personal interest was also a 'prejudicial interest' within para 10(2) if it was 'one which a member of the public with knowledge of the relevant facts would reasonably regard as so significant that it is likely to prejudice the member's judgment of the public interest'.

(iii) Mr Richardson's home, Ox Close House, was very close to the proposed extension of the quarry and was one of a handful of properties liable to be most affected by the development. …

(iv) Mr McCracken relies on the statement in para 118 of the Nolan report that 'If one hundred households are affected by a council decision, then most people would agree that a councillor similarly affected has no special interest which might debar him or her from speaking or voting, providing the interest is declared'. He submits that that was the case here and points to the fact there were some 400 signatories to a local petition opposing the development; Mr Richardson had the same interest as his constituents, albeit to a greater degree than many (and less than some). In my judgment, however, the next sentence of para 118 of the Nolan report is more pertinent: 'If in a different decision ten households are affected, then in most circumstances a councillor might feel that taking part in a decision was inappropriate.' The present case is stronger still, since Mr Richardson's home was one of three or four properties closest to the site and potentially most affected. The owners of those properties were not merely 'similarly affected' as other residents of the parish, but had a greater and special interest in the outcome of the planning application.

(v) Anyway, the test is not what was said in the Nolan report but what is laid down in paragraph 10(2) of the code; and in my judgment a member of the public with knowledge of the relevant facts would reasonably have regarded Mr Richardson's personal interest as so significant that it was likely to prejudice his judgment of the public interest. I reject Mr McCracken's submission that a knowledgeable member of the public would reasonably have regarded him as simply putting forward the views of the people he represented, or making a contribution to the debate based on his perception of the public interest, rather than being influenced by the potential impact of the development on his own home. However conscientious a councillor might be in his representative role and his concern to protect the public interest, the personal interest was a highly material additional consideration.

(vi) As a further way of examining the point, though this is not necessary for my decision, I have asked myself whether, if Mr Richardson had been a member of the committee and had participated in a decision to refuse planning permission, it would have been open to the developer to object to the decision on the ground that his participation gave rise to the appearance of bias. In my view it would have been, for the very reason that a fair-minded and informed observer would have concluded that, by reason of the personal interest, there was a real possibility that the committee was biased. The test in paragraph 10(2) of the code is not in identical terms but similar considerations underlie it."

77 Quarrel with that as Mr McCracken does, it seems to me that the judge's conclusion on this point is self-evidently correct. Assume, as the judge posited in para 84(vi), that Mr Richardson had in fact been a member of the planning committee which had then refused planning permission by a five to four majority. How could it possibly have been suggested that "a member of the public with knowledge of the relevant facts [essentially those set out in para 84(iii) of the judgment] would [not] reasonably have regarded [Mr Richardson's interest] as so significant that it [was] likely to prejudice [his] judgment of the public interest" (the language of paragraph 10(1) of the code)? Plainly it could not.

43. That the initial judgment as to whether the member has a prejudicial (or a personal) interest has to be made by him is uncontroversial. Often only he will know the facts on which the decision whether he has a personal or prejudicial interest falls to be made. But Simon Brown LJ went further in the third sentence of paragraph 76: he stated that a member acted unlawfully only if his view that he did not have a personal or prejudicial interest was irrational. If this statement of the law is binding authority, it is binding on me.
44. The tribunal considered that it was free to depart from the judgment in Richardson on the ground that it was exercising a different jurisdiction from that of the Court of Appeal in that case. In my judgment it was wrong to do so. A case tribunal must, in my judgment, treat the binding part of a judgment of the Court of Appeal, or indeed of the High Court, on the meaning and effect of the code as authoritative and binding on it, irrespective of the purpose for which the code is construed.
45. On the face of it, if it is viewed in isolation, the third sentence of paragraph 76 of the judgment of Simon Brown LJ was part of the ratio decidendi (an expression that may be in Latin, but is a legal term of art), the binding part of the judgment. The ratio of a case is defined in the classic exposition of the law of precedent, Precedent in English Law by Professors Cross and Harris, fourth edition, at page 72, as follows:

The ratio decidendi of a case is any rule of law expressly or impliedly treated by the judge as a necessary step in reaching his conclusion, having regard to the line of reasoning adopted by him, or a necessary part of his direction to the jury.

This definition was approved by the Court of Appeal in R (Kadhim v Brent Housing Board [2001] 2 WLR 1674 at [16].

46. Hence Mr Nardell cogently argued that I am bound uphold to the subjective test. Since he did not have copies of the notice of appeal or the skeleton arguments before the Court of Appeal, he was unable to demonstrate that the issue as to whether the test was objective or subjective had been argued before the Court of Appeal, but he submitted that it was clear from the judgment of Simon Brown LJ that the point had been considered by the Court of Appeal and determined.
47. However, it is plain that in the extract cited by Simon Brown LJ from the first instance judgment of Richards J that the latter had applied an objective test: see his reference in subparagraph (i) to Mr Richardson's personal interest, the definition of "prejudicial interest" in subparagraph (ii) and, most clearly, the first sentence of subparagraph (v) and the reference to the objective test for an appearance of bias in subparagraph (vi). It is, in my judgment, clear that even if Mr Richardson had reasonably considered that he did not have a prejudicial interest, when in fact objectively viewed he did, Richards J. would have rejected his claim. Simon Brown LJ cited this part of the judgment of Richards J. with evident approval. He described his judgment as a whole as "masterly", and where he differed from him, he so stated expressly. Simon Brown LJ would not have cited that extract from Richard J's judgment if he disagreed with it. Furthermore, it appears from paragraph 77 of the judgment of Simon Brown LJ that he considered the objective test for challenge to a decision on the ground of an appearance of bias on the part of the decision maker to be applicable to the issue before him. In other words, with respect to Simon Brown LJ and the other members of the Court of Appeal, paragraphs 76 and 77 of his judgment are inconsistent.
48. The answer lies in the fact that it was not argued before the Court of Appeal that Mr Richardson would have been unlawfully excluded from the meeting of the authority if he had mistakenly but reasonably considered that he did not have a prejudicial interest. As the tribunal in the present case correctly stated, there is no trace of such an argument in the judgment of Simon Brown LJ.
49. Following the hearing of this appeal, I obtained copies of the skeleton arguments of the parties in Richardson at first instance and for the Court of Appeal. Copies were provided to Mr Nardell and Mr Grodzinski, who made cogent written submissions on them.
50. The skeleton arguments confirm, in my judgment, that the point was not argued before the Court of Appeal. There is no trace of a subjective test in Mr Richardson's skeleton. The submission was baldly made:

The learning judge erred in considering in the particular circumstances that Councillor Richardson had a "prejudicial interest".

That formulation does not suggest that a subjective test was contended for. It is indicative of an objective test. Neither the skeleton argument for the respondent County Council nor that for the First Secretary of State suggests that it was responding to an argument in favour of a subjective test for either the existence of a prejudicial interest or breach of the code of conduct.

51. Furthermore, since the Court of Appeal found that Mr Richardson's view that he did not have a prejudicial interest was both mistaken and irrational, it was not called upon to decide whether a mistaken but rational view that he did not have a prejudicial interest would have entitled him to participate in the meeting in question. Because there was no relevant issue, I suspect that neither Simon Brown LJ nor the other members of the Court of Appeal gave paragraph 76 of his judgment the scrutiny it has received before me. This also explains why the Court of Appeal did not in that paragraph clearly distinguish between the question whether a member has a relevant interest, and the question what consequences follow if he mistakenly but reasonably believes that he does not.
52. It has long been established that a statement of a proposition of law in a judgement on a matter that was not the subject of argument is not binding authority. I refer to the discussion in Cross and Harris at pages 158-161, and to the authorities there cited. In Baker v The Queen [1975] AC 774, 788, the Privy Council held that the Court of Appeal for Jamaica had not been bound by a proposition of law contained in a previous decision of the Board which the Board had assumed without argument to be correct for the purpose of disposing of that case. In Re Hetherington [1990] 1 Ch 1, Sir Nicholas Browne-Wilkinson V-C held that he was not bound by a proposition of law the correctness of which had been assumed by the House of Lords without argument. The position is summarised in Cross and Harris at 161 as follows:

The upshot of these decisions is a loosening in the doctrine of stare decisis. It does not encompass rationes decidendi where it can be inferred that the deciding court did not address its mind to a proposition of law, even if that proposition was essential to its decision; and that inference can be easily drawn from the absence of any (or even any adequate) argument on the point in question.

That, apart from the words in parentheses and the statement of the facility with which the inference can be drawn, this is a correct statement of the law is confirmed by the judgment of the Court of Appeal in R (Khadim) v Brent London Borough Council [2001] 2 WLR 1674, in which it stated:

33. We therefore conclude, not without some hesitation, that there is a principle stated in general terms that a subsequent court is not bound by a proposition of law assumed by an earlier court that was not the subject of argument before or consideration by that court.

See too [34] to [37]. As appears from this statement, the principle is not restricted to propositions of law that were the subject of concession: it is sufficient that it was not the subject of argument or consideration. At [38] the Court of Appeal added:

38. Like all exceptions to, and modifications of, the strict rule of precedent, this rule must only be applied in the most obvious of cases, and limited with great care. The basis of it is that the proposition in question must have been assumed, and not have been the subject of decision. That condition will almost always only be fulfilled when the point has not been expressly raised before the court and there has been no argument upon it … And there may of course be cases, perhaps many cases, where a point has not been the subject of argument, but scrutiny of the judgment indicates that the court's acceptance of the point went beyond mere assumption. Very little is to be required to draw that latter conclusion: because a later court will start from the position, encouraged by judicial comity, that its predecessor did indeed address all the matters essential for its decision.

53. I have considered paragraph 76 of the judgment of Simon Brown LJ in Richardson with the principle stated by the Court of Appeal in Khadim at [33] but with the admonition at [38] in mind. Having regard to the inconsistency to which I have referred above, and the lack of any indication of any argument on the point in the skeleton arguments before the Court of Appeal or in the judgment of Simon Brown LJ, I have no doubt that the proposition of law stated in the crucial sentence of paragraph 76 was assumed and not decided, and did not represent the considered view of the Court.
54. The above considerations lead me to reject the Appellant's contentions, and to conclude that in this context the decision of a member as to his interest is not lawful if it is made reasonably but is wrong. The comparison with other decisions of public authorities that are the subject of judicial review proceedings is inapt. Given that this is a context where, on the Appellant's submission, the member is very much a judge in his own cause, an objective test for both the existence of a relevant interest and a failure to comply with the code is appropriate and indeed necessary.
55. It follows that the tribunal correctly held that it was not bound by paragraph 76 of the judgment in Richardson. Nor is this Court. For the reasons given above, I am clear that the Appellant's contention for a subjective test should be rejected.

Conclusion

56. Whether a member has a personal or a prejudicial interest is a question to be determined objectively. The mistaken but reasonable view of the member that he has no such interest is irrelevant.
57. The test for a failure to comply with the code by failing to comply with paragraph 8 or paragraph 10 of the model code applicable to parish councils is similarly objective. A member who has a personal interest who does not act as required by paragraph 8, and a member with a prejudicial interest who fails to comply with paragraph 10 (unless he takes advantage of paragraph 9(2)), fails to comply with the code and, if his default is referred to a case tribunal of the Adjudication Panel for England, is liable to the sanctions provided in section 79.
58. For these reasons, the appeal will be dismissed.

Monday, 11th April 2005

MR JUSTICE STANLEY BURNTON: My judgment has been distributed in draft. I am grateful to counsel for their comments which have led to the excision of a paragraph which was controversial. Subject to that, the reasons I decided that it was appropriate to dismiss this appeal are set out in my judgment, copies of which, in its final form, are now available for those who are interested, including the press.

MR GRODZINSKI: My Lord, I am grateful for your Lordship's judgment. We have no applications for costs or otherwise.

MR NARDELL: My Lord, I have no application, but would your Lordship indulge me for a moment or two as I am instructed to explain our position. No doubt, if Lord Brown of Eaton-under-Heywood, as he now is, were the judge of these matters, in terms of the thoroughness of your Lordship's judgment and your Lordship's felicity of expression on these complicated issues, no doubt the epithet "masterly" would be willingly applied to your Lordship's judgment by Lord Simon Brown.

MR JUSTICE STANLEY BURNTON: He has never done it before now.

MR NARDELL: As regards those matters --

MR JUSTICE STANLEY BURNTON: He probably will never now.

MR NARDELL: As regards those aspects of your Lordship's judgment, we would, of course, be at one with Lord Brown in that expression of view, but as to the substantive content of your Lordship's judgment we would prefer to reserve our position. Your Lordship will know that because this is a second appeal your Lordship cannot entertain any application for permission to appeal in any event, only the Court of Appeal can grant permission in those circumstances and in the restricted grounds set out in CPR 52.13.

MR JUSTICE STANLEY BURNTON: Why is this a second appeal?

MR NARDELL: Because the matter comes before your Lordship by way of appeal, so any appeal to the Court of Appeal --

MR JUSTICE STANLEY BURNTON: That would be a second appeal.

MR NARDELL: Yes, I do apologise.

MR JUSTICE STANLEY BURNTON: So it is for the Court of Appeal to give leave - permission, as they say now.

MR NARDELL: Absolutely so, and your Lordship is not in a position to entertain an application for permission to appeal.

The only application which I could make to your Lordship, were I instructed to do so, would be an application that the stay granted by Newman J should be continued over the period for filing an appellant's notice. My Lord, I do not make that application for this reason: that despite your Lordship's suggestions in argument, with which we are entirely at one, the difficulty apparently left for courts at a first instance by the terms in which the Court of Appeal expressed itself at paragraph 76 of its judgment in Richardson, for that reason, as your Lordship suggested in argument, our argument certainly would be that the issue would benefit from being considered by the Court of Appeal and would satisfy even the restricted criteria for the grant of permission set out in section 55 of the Access to Justice Act.

But, regrettably, if the Court of Appeal does consider the matter in the future it will not be in this case. Counsellor Scrivens takes the view that having funded this litigation out of his own pocket so far it would not make sense for him to take the matter further. He sees, as a local counsellor, the benefit of finality and not having litigation in the Court of Appeal, and potentially a second round in the adjudication panel if he succeeds, hanging over his head and, indirectly, the heads of his constituents. So, for that reason I am not instructed to make the application which I foreshadowed, nor to make any application to the Court of Appeal.

So I am grateful to your Lordship for indulging me. If there were any observations which your Lordship might be inclined to make for the benefit of any future case, those would be observations willingly received on our side.

MR JUSTICE STANLEY BURNTON: Thank you for those observations and there is no indulgence involved. I expressed, even in the final version of this judgment, a degree of sympathy with Counsellor Scrivens. I reached a firm view as to what the law is and should be and I do not propose to say anything more about it. My judgment speaks for itself.

MR NARDELL: I am much obliged.

MR JUSTICE STANLEY BURNTON: Thank you very much for the explanation and indeed to both of you for coming over having regard to the fact that there are no consequential orders at all.