In response to the present crisis in banking, the government has launched a number of different schemes under the Banking Rescue Act 2008 (a fictional piece of legislation). Insofar as is relevant, the Act provides the following: Section 1 states that the Chancellor may create Regulations concerning rescue plans for banks and compensation schemes for investors in order to restore confidence in the banking system. Such regulations may only be created 'after consultation with relevant parties'. Section 2, which creates a new regulatory regime for banks.
All banks which wish tobe covered by the rescue plans and compensation schemes provided for in section 1 must be licensed. The Chancellor is given discretion to grant licences to banks which he considers to be 'fit and proper' to hold such a licence. Section 3, which permits the Chancellor to take action in order to protect UK investors in cases where he believes that banks are being 'mismanaged'. The measures which the Chancellor is permitted to take include confiscation of assets, closing down of branches, or the imposition of fines. 2 The Act is now in force, and the Chancellor has taken steps under all of the provisions of the
legislation outlined above. As a result, the following clients come to your office seeking advice on the possible success of a judicial review application, bringing an action in private law or seeking redress through alternative grievance resolution mechanisms in order to resolve their present problems: (a) John is the chairman of the 'Investor's Protection Group', an independent charity which aims to represent the interests of investors. The Chancellor has drawn up Regulations as provided for by Section 1 of the Banking Rescue Act 2008, detailing
the rescue plans for banks and the compensation to be given to investors. Neither John nor the 'Investor's Protection Group' were consulted prior to the creation of the Regulations, and they now wish to challenge this lack of consultation. (b) Plughole Bank Plc. seeks advice on the refusal of the Chancellor to grant a licence in its case. A letter from the Chancellor has informed the bank that he deems it 'unfit' to hold such a licence. The bank has requested further reasons for the refusal of the licence and a hearing of its case, both of which have been refused. Furthermore, the
Chancellor has made it clear that there is no appeal against his decision. Confidence in the bank has been shaken as a result of the refusal of a licence, and this has had a significant impact on its business. (c) Norma seeks advice as a result of the failure of Snowman Bank Plc – she lost i?? 15,000 when the bank failed. The Treasury has acknowledged that the bank was licensed under section 2 of the Banking Rescue Act 2008 and that she has the right to a government refund of her money under the compensation scheme created under section 1 of the Banking Rescue Act 2008.
Despite making a claim to the Treasury 4 months ago, at which point she was advised that she would have the money within 4 weeks, she has not yet received any payment. When she telephoned to enquire about the whereabouts of her compensation she was informed that her application has been lost, and that she will have to re-apply. As a result, Norma has lost i?? 500 in interest that she could have received should she have reinvested the money, and would like to know if there is any means by which she can claim compensation for this loss. (d) The directors of Rickety Bank Ltd.
come to you for advice as a result of the Chancellor taking some action against their bank under section 3 of the Banking Rescue Act 2008. The Chancellor wrote to the bank informing them that due to two small breaches of banking rules he believed that the bank was being 'systematically mismanaged' and, as such, he was closing down all of the bank's branches and seizing the bank's assets in order to protect its investors. The bank was granted a hearing before the Chancellor and Treasury officials, although they were not permitted any legal representation. At this hearing, the bank argued that the
measures taken by the Chancellor were excessive in the light of the two minor breaches of banking rules, but the Chancellor refused to modify his decision. Judicial review is a remedy of last resort. 1 Therefore it is expected that all other appropriate remedies will be sought before pursuing a claim for judicial review. 2 Alternative grievance redress The alternatives to judicial review are the use of an ombudsman, a private law claim, or going to a tribunal. The Ombudsman's jurisdiction cover issues of maladministration3, Investors Protection Groups (IPG) issue concerns illegality.
Administrative appeals would be sent to the upper tribunal of the tribunal service however, this matter in hand does not fall under its jurisdiction4. If John were to seek financial compensation, a claim in tort for breach of statutory duty would offer a monetary remedy in damages. However he would have to prove he suffered a harm that was of the kind that the act was made to prevent5 Judicial review The charity would need to apply to the High court administrative division ex parte for permission to make a claim for judicial review promptly or in any event within 3 months of the chancellor's failure to consult.
If permission is granted, the case will proceed to a full hearing6. In addition the claim will need to satisfy the requirements of O'Reilly7 which states for a claim to proceed, the matter must concern the activities of a public body in matters relating to public law. The challenge itself would be brought under The Supreme Court Act 1981 S. 31 and Part 54 of the Civil Procedure Rules and can be made by any person with locus Standi, that is, sufficient interest in the matter8. In assessing standing the approach varies between, types of organisations and individuals claims.
National Federation Of Self Employed And Small Businesses Ltd9 was the first important decision on the test, Lord Diplock referred to the desirability of a 'single public-minded taxpayer' being able to challenge the validity of unlawful administrative action10. In addition in support of the charity getting standing is the ruling in Greenpeace11. The reason for giving a pressure group standing12 was if Greenpeace were not able to bring the claim, then there would not be an effective manner to bring the claim to court. Under this liberal precedent, the IPG would appear to have standing however this is subject to court's discretion. 13
Grounds for review Satisfying all these terms IPG will then need to establish a ground for review. In this case the grounds of challenge concern the non enforcement of the statutory duty to consult. This duty can either be mandatory or directory. A directory requirement is one that non-observance will not nullify the decision. A mandatory requirement is one which is regarded as so essential that failure to observe it results in treating the decision made as invalid. In the case of Association of Metropolitan Authorities14 the duty to consult was held to be a mandatory requirement as it is a means of protecting the interests of those affected.
In some areas there will be a general discretion to consult such interests that appear to be appropriate. This is a test of reasonableness in many ways, not based on the Wednesbury test15 but 'a matter of common sense16'. This discretion is not absolute, to the point of choosing not to consult however, there is no requirement to do any more than ask for the consulted parties' views – they can be ignored17. If it is found the chancellor was aware that the charity was an interested party but choose not to consult them, this could be challenged as an unreasonable use of discretion18.
Where a duty to consult exists it must be performed before the mind of the authority becomes unduly fixed19 following the Gunning Criteria20. Based on this case law it would appear that the requirement was mandatory and discretion should have been exercised in favour of IPG. Policy Considerations Cases such as Hill21 have recognised blanket immunity for claims against certain public services in order to provide security in duty and prevent future inhibited and ineffective performance. Therefore IPG should therefore be aware loosing the claim based on these grounds.