Re National Association of Councillors And

1

RE NATIONAL ASSOCIATION OF COUNCILLORS AND

CONFEDERATION OF EUROPEAN COUNCILLORS

______

OPINION: TO ADVISE BELFAST CITY COUNCIL

1.The subject matter of this Opinion is concerned with the activities of two separate organisations, the National Association of Councillors ("NAC ") and the Confederation of European Councillors ("CEC "). I am requested to advise Belfast City Council ("the Council ") on two questions:

(a)Does the Council have statutory power to finance the attendance by its councillors at the meetings of either of the aforementioned organisations?

(b)Is the Council empowered to defray the subscription costs of its membership of either organisation?

The context is provided by recent communications from the Local Government Auditor ("the Auditor "), who has suggested that the Council has no power to incur any of the above expenses.

2.My instructions disclose that the Council is a corporate member of NAC and that, pursuant thereto:

(a)The Council pays an annual subscription of £765 plus VAT.

(b)Three councillors represent the Council at meetings and seminars of the NAC.

The NAC is described in my instructions as a body established to further the interests of elected members of local authorities throughout the United Kingdom. Its primary purpose is to provide a forum for members to discuss matters of common interest and to provide for the training and education of councillors.

3.Information on the second of the organisations concerned, the CEC, is rather sparse. My instructions suggest that it is essentially a European version of the NAC. From the documents briefed, I note the following about its activities:

(a)On 4th September 2004, the CEC organised a one-day information/training seminar under the title "The Powers and Functions of Local Government, North and South ", described as part of the organisation's "Northern Ireland (NAC) Republic of Ireland (LAMA) Councillor Co-operation Project ".

(b)The annual CEC conference is scheduled to be held in Gibraltar from 14th to 17th October 2004. The topics on the agenda are cross-border relations between Northern Ireland and the Republic of Ireland; cross-border relations between Gibraltar and Spain; the activities and future developments of CEC; and the EU Constitution.

4.Section 38(1) of the Local Government Act (Northern Ireland) 1972 provides:

"Subject to subsection (3), a council may make payments towards expenditure reasonably incurred by a councillor or an officer of the council in respect of attendance authorised by the council at any conference or meeting, whether inside or outside the United Kingdom, convened by any person or body (other than a person or body convening it in the course of a trade or business or a body whose objects are wholly or partly political) for the purpose of discussing matters connected with the discharge of the functions of the council or the development of trade, industry or commerce in the district or otherwise affecting the district or its inhabitants."

5.Section 38(1) is expressed to be "subject to subsection (3)". The effect of this is that any payments made under subsection (1) "for any purpose corresponding to a purpose for which payments may be made under Section 36" shall be at rates determined by the Council and shall not exceed the rates determined by the Department under Section 36 for payments for the corresponding purpose. Section 36 provides that regulations shall be made by the Department regulating payments to councillors " … for, or in relation to anything done in connection with, service as councillors." Finally, in considering this part of the statute, and bearing in mind the importance of the general principle that every exercise in statutory interpretation must pay careful regard to the full statutory context, reference should also be made to Sections 37 and 39.

6.My analysis of Sections 36-39 of the 1972 Act is as follows:

(a)Section 36 is an umbrella provision concerned with payments to councillors "for, or in relation to anything done in connection with, service as councillors … ". It is to be contrasted, in this respect, with the three immediately succeeding Sections of the statute.

(b)Section 37 empowers a council to "… make payments towards expenditure reasonably incurred by councillors in making official or courtesy visits, whether inside or outside the United Kingdom, on behalf of the Council ". It is arguable that this specific payment power is enshrined in the omnibus payment power contained in Section 36.

(c)Section 38 is concerned with attendance by councillors or council officers at conferences and meetings, reasonably connected with council functions and business. [See paragraph 7, infra].

(d)Finally, Section 39 empowers a council to provide personal accident insurance to councillors for mishaps occurring while "… engaged on the business of the council ".

While it is arguable that the specific power enshrined in Section 38 was already contained within the omnibus provision of Section 36, the same could not be said of Section 39.

7.Section 38 is a deceptively detailed statutory provision. In conjunction with the outline in paragraphs 4 and 5 [supra] I would put forward the following analytical breakdown of Section 38:

(a)It invests the Council with a discretionary power.

(b)Payments made in the exercise of the power can be either partial or complete recompense for the expenditure incurred by the individual.

(c)There must be proof that the expenditure has been reasonably incurred.

(d)The expenditure must be reasonably incurred by attendance at a conference or meeting, without geographical limitation.

(e)The conference organiser or promoter must not be acting in the course of a trade or business.

(f)Nor may the organiser or promoter be a body with objects wholly or partly political.

(g)The individual's attendance at the event must be authorised by the Council - this is likely to be interpreted by a court as authorised in advance.

(h)The attendance must be for one of the three specified statutory purposes viz., discussing matters connected with the discharge of the functions of the Council or the development of trade, industry or commerce in the district or otherwise affecting the district or its inhabitants.

Nothing of significance turns on subsection (2), which is self-explanatory. I have already commented above on the inter-relationship between subsections (1) and (3) [paragraph 5, supra]. Finally, note should be taken of the expanded definition of "councillor " in subsection (4) - "… includes a member of a committee or sub-committee of a council, whether he is a member of the council or not " [my emphasis].

8.In logical sequence, therefore, the overall exercise may be broken down as follows:

(a)Firstly, what is the meaning of Section 38? I have already addressed this in paragraphs 5 and 7, supra.

(b)Secondly, how is Section 38 to be applied to the particular facts? This will depend, self-evidently on the peculiar facts of each situation.

(c)Is the proposed or actual exercise by the Council of its power under Section 38 reconcilable with its supervening fiduciary duty to the ratepayers?

(d)Finally, is the proposed or actual exercise by the Council of its power under Section 38 consistent with the applicable principles of public law?

9.I consider that, ultimately, the answers to the two questions posed for my advice [paragraph 1, supra] turn on the proper construction of Section 38 of the 1972 Act. However, this is not an exercise of statutory construction in isolation. Rather, Section 38 must also be considered against the framework of certain well-established principles. These are the principles relating to (a) the fiduciary duty owed by the Council to its ratepayers and (b) the exercise by the Council of public law powers.

10.The fiduciary duty owed by a District Council to its ratepayers is a well-established feature of local government law. It was authoritatively enunciated by Lord Atkinson in the case of Roberts –v- Hopwood [1925] AC 578 who stated [pp. 595-596] that a local authority "… stands somewhat in the position of trustees or managers of the property of others", with reference to its ratepayers.

11.The philosophy of Roberts –v- Hopwood was endorsed in the modern era by the House of Lords in Bromley LBC –v- GLC [1982] 1 All ER 129, from which one can derive the following legal constraints to which a local authority is subject:

(a)The obligation to have regard to ordinary business principles i.e., to act with good commercial sense, which underpins the exercise or purported exercise of any relevant statutory power.

(b)The fiduciary duty owed to ratepayers.

Lord Wilberforce, while acknowledging that social conditions had changed during a period of some sixty years, stated unequivocally that the decision in Roberts –v- Hopwood "… remains authoritative as to principle …" [p. 155B]. He further stressed that when a local authority proposes to exercise its powers it must do so "… with proper regard to its fiduciary duty to its ratepayers" [p. 157H]. Lord Scarman, for his part, stated [p. 171F]:

"The House is invited to construe the Act in the light of the principle that a local authority owes a fiduciary duty to its ratepayers. It is an invitation which has to be accepted …"

12.Two further observations about the fiduciary duty owed by a District Council are appropriate. First, this duty influences, but does not determine, questions of statutory construction. Second, the duty is not absolute: rather, the Council's legal obligation is to take it into account, as a mandatory relevant consideration, when making expenditure decisions: Regina –v- Secretary of State for the Environment, ex parte Hammersmith and Fulham LBC [1990] AC 521.

13.Also to be noted is the principle underpinning the decision of the House of Lords in Tower Hamlets BC –v- Chetnik Developments [1988] 1 All ER 961 that "the highest standards of probity and fair dealing" are to be expected of local authorities [per Lord Bridge, p. 971H] – albeit in the context of the question whether a local authority could lawfully decline to refund overpaid rates].

14.Public law principles. When the role and ambit of every Council's fiduciary duty are correctly understood [paragraphs 10 - 13, supra] its inter-relationship with the applicable principles of public law becomes readily apparent. In the context presently under consideration, the relevant principles embody requirements that the District Council in question –

(a)Must not fetter its discretion.

(b)Must not constrain itself by slavish adherence to a given policy.

(c)Must take into account all material considerations.

(d)Must disregard all immaterial factors.

(e)Must act reasonably, in the Wednesbury sense.

15.On a cautionary note, the Wednesbury standard traditionally represented a formidable hurdle for challenging parties and, hence, a potent shield for public authorities such as District Councils. However, in contemporary law, the Wednesbury doctrine has been diluted by a more contextual approach, giving rise to more intensive levels of judicial review. This is emphasized in the speech of Lord Steyn in ex parte Daly [2001] 3 All ER 433 where he approved an earlier judicial statement that "… the intensity of review in a public law case will depend on the subject matter in hand" [p. 447A – paragraph 28]. In similar vein, per Lord Cooke [paragraph 32]:

"The depth of judicial review and the deference due to administrative discretion vary with the subject matter."

16.I would add, with some emphasis, that the Council must be alert to the case-by-case approach which it is obliged to adopt to the exercise of its power under Section 38. This means, in practice, making due advance enquiry into the purpose of the event in question. The Council must be armed with sufficient information to ensure that a properly informed and considered decision is made. If further information about the event is desirable, it should be sought and obtained. If necessary, final decisions should be deferred until all desirable information is available. I would add that I would expect a court to construe the words "the purpose " as "the main or dominant purpose ": it need not, in my view, be the exclusive purpose of the event in question. Furthermore, the words "matters connected with the discharge of the functions of the council " connote that there must be a clearly identifiable nexus between the subject matter of the event in question and Council functions.

17.I concur with my instructing solicitor that the words "the functions of the council " should be broadly construed. In the language of Blofeld J, this phrase " … is apt to embrace all the duties and powers of a local authority: the sum total of the activities Parliament has entrusted to it " [see Grubb -v- PriceWaterhouseCoopers and Another]. An important local example in this context is provided in Re Cook's Application [1986] NI 242, where the breadth of the approach of Hutton J can be discerned from the following passage [p. 254A/B]:

"Therefore it follows, in my opinion, that a discussion by the Council of the merits or demerits of the Anglo Irish Agreement and a resolution expressing opposition to the Agreement was intra vires the Council, because the working of the Agreement could affect the functions carried out by the Council or in respect of which the Council has an interest given to it by statute."

This approach was expressly approved by the Court of Appeal: see the judgment of Lord Lowry LCJ, p. 276D/E.

18.I would highlight a passage in the minutes of a meeting of the Policy and Resources Sub-Committee held on 16th February 2004:

"It was pointed out that the work of [NAC] related directly to the role of Councillors, organised training for Members and provided opportunities to share ideas and good practice in respect of local government generally."

I shall proceed on the basis that this is an accurate statement. However, I would reiterate the importance of a case-by-case approach. A blanket approval by the Council would not, in my view, be defensible.

19.I would observe that certain nice questions of statutory interpretation are thrown up by the syntax and structure of Section 38. They are as follows:

(a)Must the authorised attendance at the event in question be for any of the three specified statutory purposes? Or must the event itself be convened for any of these purposes? While the former is more probably the correct interpretation, there is some scope for debate here. I prefer the former.

(b)With reference to the three expressed statutory purposes, do the words "for the purpose of discussing matters connected with " qualify the second statutory purpose? Or the third? I consider both answers to be in the affirmative.

As regards the first and second of the specified statutory purposes, the words "connected with " require the existence of a sufficient nexus. With regard to the third statutory purpose, I would expect a court to construe the clause "or otherwise affecting the district or its inhabitants " in terms of having some tangible impact on or connection with the district or its inhabitants.

20.Based on the information contained in my papers, I do not consider that either NAC or CEC is an organisation whose objects are wholly or partly political. Accordingly, the statutory prohibition does not arise.

21.Section 111 of the 1972 Act empowers a council to pay reasonable subscriptions to "associations of councils or officers or members of councils formed for the purpose of consultation upon and discussion of matters relating to the common interests of councils or matters relating to local government."

This Section is framed in wide terms and, on the basis of the information briefed to me, I am satisfied that NAC comes within its ambit. As regards CEC, I note that a presentation was given to members of the Policy and Resources Committee on 2nd August 2004. The minutes record, in material part:

"… the objectives of [CEC] were to develop and enhance co-operation between local authorities with a view to addressing areas of mutual interest, as well as extending and strengthening existing linkages and friendships … although [CEC] was continuing to evolve, it had been successful already in achieving the cross-fertilisation of ideas and the exchange of good practice between Councils in Northern Ireland and the Republic of Ireland."

The key question is: For what purpose is CEC formed? Once again, I would expect the court to construe "purpose " as "main or dominant purpose ". I consider, on balance, that CEC is an organisation which comes within the ambit of Section 111.

22.However, that does not end the matter. Rather, the Council, in deciding whether to pay an annual subscription to either NAC or CEC:

(a)Must bear in mind its fiduciary duty to the ratepayers [paragraphs 10 - 13, supra].

(b)Must act in accordance with the relevant principles of public law [paragraphs 14 - 16, supra].

(c)And, finally, is constrained by the requirement that the subscription be of "reasonable " dimensions.

23.Conclusions

23.1The Council is empowered to authorise and finance the attendance of individual councillors or officers at NAC and CEC events, provided that the facts pertaining to each individual application and event come within the ambit of one of the specified statutory purposes and the Council acts within the legal constraints outlined above. Any approval must be individually given or withheld: a blanket approach is impermissible. [Thus, for example, all available information about the forthcoming CEC annual conference would have to be collated and then carefully scrutinised].

23.2Subscriptions by the Council to secure membership of NAC and CEC are lawful, by virtue of Section 111 of the 1972 Act.

Nothing further occurs.

Bernard McCloskey, QC

21st September 2004.