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Table of Contents

  1. Acknowledgments
  2. Chapter one: Defining the constitution
  3. Chapter two: Parliamentary sovereignty
  4. Chapter three: The rule of law and the separation of powers
  5. Chapter four: The royal prerogative
  6. Chapter five: The House of Commons
  7. Chapter six: The House of Lords
  8. Chapter seven: The electoral system
  9. Chapter eight: Parliamentary privilege
  10. Chapter nine: Constitutional conventions
  11. Chapter ten: Local government
  12. Chapter eleven: Parliamentary sovereignty within the European Union
  13. Chapter twelve: The governance of Scotland and Wales
  14. Chapter thirteen: Substantive grounds of judicial review 1: illegality, irrationality and proportionality
  15. Chapter fourteen: Procedural grounds of judicial review
    1. Cooper v Wandsworth Board of Works [1863] 143 ER 414
    2. R v Metropolitan Police Commissioner, ex parte Parker [1953] 2 All ER 717
    3. Ridge v Baldwin and others [1963] 2 All ER 66
    4. Re K (H) (an infant) [1967] 1 All ER 226
    5. Schmidt and Another v Secretary of State For Home Affairs [1969] 1 All ER 904
    6. McInnes v Onslow Fane and another [1978] 3 All ER 211
    7. R v Hull Prison Board of Visitors, ex parte St Germain and others (No 2) [1979] 3 All ER 545
    8. Attorney-General of Hong Kong v Ng Yuen Shiu (Privy Council) [1983] 2 W.L.R. 735; [1983] 2 A.C. 629
    9. R v Secretary of State for the Home Department, ex parte Khan [1985] 1 All ER 40
    10. R v North East Devon Health Authority, ex parte Coughlan [2000] 3 All ER 850
    11. Regina v Secretary of State for Education and Employment, ex parte Begbie (CA) [2000] 1 W.L.R. 1115
    12. R (on the application of Bibi) v London Borough of Newham; [2001] EWCA Civ 607; [2002] 1 WLR 237 (CA).
    13. R v East Sussex County Council, ex p Reprotech (Pebsham) Ltd (HL) [2002] UKHL 8; 2002] 4 All ER 58.
    14. Metropolitan Properties Co (F G C) Ltd v Lannon and Others [1968] 3 All ER 304
    15. R v Gough [1993] 2 All ER 724
    16. R v Bow Street Metropolitan Stipendiary Magistrate and others, ex parte Pinochet Ugarte (No 2) [1999] 1 All ER 577
    17. Taylor v Lawrence [2003] QB 528
  16. Chapter fifteen: Challenging governmental decisions: the process
  17. Chapter sixteen: Locus standi
  18. Chapter seventeen: Human rights I: Traditional perspectives
  19. Chapter eighteen: Human rights II: Emergent principles
  20. Chapter nineteen: Human rights III: New substantive grounds of review
  21. Chapter twenty: Human rights IV: The Human Rights Act 1998
  22. Chapter twenty-one: Human rights V: The impact of The Human Rights Act 1998
  23. Chapter twenty-two: Human rights VI: Governmental powers of arrest and detention
  24. Chapter twenty-three: Leaving the European Union

R v North East Devon Health Authority, ex parte Coughlan [2000] 3 All ER 850



1. The critical issue in this appeal is whether nursing care for a chronically ill patient may lawfully be provided by a local authority as a social service (in which case the patient pays according to means) or whether it is required by law to be provided free of charge as part of the National Health Service (NHS). If local authority provision is lawful, a number of further important questions arise: as to the propriety of the process by which eligibility for long term health care on the NHS, instead of as a social service, is determined; as to the effect of an assurance given by the Exeter Health Authority, the predecessor of the appellant, the North and East Devon Health Authority (health authority) to the respondent to this appeal (the applicant for judicial review), Miss Coughlan, that she should have a home for life at Mardon House, an NHS facility; and as to the process by which Miss Coughlan has been assigned to local authority care.

2. Normally, where a person is assigned to local authority care she will, subject to a means test, be liable to meet the cost of that care. For reasons to which we will come, Miss Coughlan will not in any event be called upon to pay for her care; but, in hearing her claim, which he decided in her favour, Hidden J did not consider that this made the issues -- and, in particular, the critical issue -- academic. Now that all issues have been decided in her favour, both the health authority and (on this appeal) the Secretary of State for Health plainly have a proper interest in challenging the judgment.

3. Miss Coughlan was grievously injured in a road traffic accident in 1971. She is tetraplegic; doubly incontinent, requiring regular catheterisation; partially paralysed in the respiratory tract....In 1993 she and seven comparably disabled patients were moved with their agreement from Newcourt Hospital, which it was desired to close, to a purpose-built facility, Mardon House. It is a decision of the health authority made on 7 October 1998 to close Mardon House which is the immediate cause of the present litigation.

Legitimate expectation -- the court's role

55. [I]t is necessary to begin by examining the court's role where what is in issue is a promise as to how it would behave in the future made by a public body when exercising a statutory function. In the past it would have been argued that the promise was to be ignored since it could not have any effect on how the public body exercised its judgment in what it thought was the public interest. Today such an argument would have no prospect of success, as Mr Goudie and Mr Gordon accept.

56. What is still the subject of some controversy is the court's role when a member of the public, as a result of a promise or other conduct, has a legitimate expectation that he will be treated in one way and the public body wishes to treat him or her in a different way. Here the starting point has to be to ask what in the circumstances the member of the public could legitimately expect. In the words of Lord Scarman in Findlay v Secretary of State for the Home Dept [1984] 3 All ER 801 at 830, [1985] 1 AC 318 at 338, 'But what was their legitimate expectation?' Where there is a dispute as to this, the dispute has to be determined by the court, as happened in Findlay. This can involve a detailed examination of the precise terms of the promise or representation made, the circumstances in which the promise was made and the nature of the statutory or other discretion.

57. There are at least three possible outcomes: (a) The court may decide that the public authority is only required to bear in mind its previous policy or other representation, giving it the weight it thinks right, but no more, before deciding whether to change course. Here the court is confined to reviewing the decision on Wednesbury grounds. This has been held to be the effect of changes of policy in cases involving the early release of prisoners (see Re Findlay [1984] 3 All ER 801, [1985] AC 318; R v Secretary of State for the Home Dept, ex p Hargreaves [1997] 1 All ER 397, [1997] 1 WLR 906. (b) On the other hand, the court may decide that the promise or practice induces a legitimate expectation of, for example, being consulted before a particular decision is taken. Here it is uncontentious that the court itself will require the opportunity for consultation to be given unless there is an overriding reason to resile from it (see A-G for Hong Kong v Ng Yuen Shiu [1983] 2 All ER 346, [1983] 2 AC 629) in which case the court will itself judge the adequacy of the reason advanced for the change of policy, taking into account what fairness requires. (c) Where the court considers that a lawful promise or practice has induced a legitimate expectation of a benefit which is substantive, not simply procedural, authority now establishes that here too the court will in a proper case decide whether to frustrate the expectation is so unfair that to take a new and different course will amount to an abuse of power. Here, once the legitimacy of the expectation is established, the court will have the task of weighing the requirements of fairness against any overriding interest relied upon for the change of policy.

58. The court having decided which of the categories is appropriate, the court's role in the case of the second and third categories is different from that in the first. In the case of the first, the court is restricted to reviewing the decision on conventional grounds. The test will be rationality and whether the public body has given proper weight to the implications of not fulfilling the promise. In the case of the second category, the court's task is the conventional one of determining whether the decision was procedurally fair. In the case of the third, the court has when necessary to determine whether there is a sufficient overriding interest to justify a departure from what has been previously promised.

59. In many cases the difficult task will be to decide into which category the decision should be allotted. In what is still a developing field of law, attention will have to be given to what it is in the first category of case which limits the applicant's legitimate expectation (in Lord Scarman's words in Findlay) to an expectation that whatever policy is in force at the time will be applied to him. As to the second and third categories, the difficulty of segregating the procedural from the substantive is illustrated by the line of cases arising out of decisions of justices not to commit a defendant to the Crown Court for sentence, or assurances given to a defendant by the court: here to resile from such a decision or assurance may involve the breach of legitimate expectation (see R v Keily (1989) 11 Cr App R(S) 273 at 276; R v Dover Magistrates' Court, ex p Pamment (1994) 15 Cr App R(S) 778 at 781-782).

No attempt is made in those cases, rightly in our view, to draw the distinction. Nevertheless, most cases of an enforceable expectation of a substantive benefit (the third category) are likely in the nature of things to be cases where the expectation is confined to one person or a few people, giving the promise or representation the character of a contract. We recognise that the courts' role in relation to the third category is still controversial; but, as we hope to show, it is now clarified by authority.

60. We consider that Mr Goudie and Mr Gordon are correct, as was the judge, in regarding the facts of this case as coming into the third category. (Even if this were not correct because of the nature of the promise, and even if the case fell within the second category, the health authority in exercising its discretion and in due course the court would have to take into account that only an overriding public interest would justify resiling from the promise.) Our reasons are as follows. First, the importance of what was promised to Miss Coughlan (as we will explain later, this is a matter underlined by the Human Rights Act 1998); second, the fact that promise was limited to a few individuals, and the fact that the consequences to the health authority of requiring it to honour its promise are likely to be financial only.

The authorities

61. Whether to frustrate a legitimate expectation can amount to an abuse of power is the question which was posed by the House of Lords in R v IRC, ex p Preston [1985] 2 All ER 327, [1985] AC 835 and addressed more recently by this court in R v IRC, ex p Unilever plc [1996] STC 681, [1996] COD 421. In each case it was in relation to a decision by a public authority (the Crown) to resile from a representation about how it would treat a member of the public (the taxpayer). It cannot be suggested that special principles of public law apply to the Inland Revenue or to taxpayers. Yet this is an area of law which has been a site of recent controversy, because while Preston has been followed in tax cases, using the vocabulary of abuse of power, in other fields of public law analogous challenges, couched in the language of legitimate expectation, have not all been approached in the same way.

62. There has never been any question that the propriety of a breach by a public authority of a legitimate expectation of the second category, of a procedural benefit -- typically a promise of being heard or consulted -- is a matter for full review by the court. The court has, in other words, to examine the relevant circumstances and to decide for itself whether what happened was fair. This is of a piece with the historic jurisdiction of the courts over issues of procedural justice. But in relation to a legitimate expectation of a substantive benefit (such as a promise of a home for life) doubt has been cast upon whether the same standard of review applies. Instead, it is suggested that the proper standard is the so-called Wednesbury standard, which is applied to the generality of executive decisions. This touches the intrinsic quality of the decision, as opposed to the means by which it has been reached, only where the decision is irrational or (per Lord Diplock in Council of Civil Service Unions v Minister for the Civil Service [1984] 3 All ER 935 at 951, [1985] AC 374 at 410) immoral.

63. This is not a live issue in the common law of the European Union, where a uniform standard of full review for fairness is well established (see J Schwarze European Administrative Law, (English edn, 1992) pp 1134-1135 and the ECJ cases reviewed in R v Ministry of Agriculture Fisheries and Food, ex p Hamble (Offshore) Fisheries Ltd [1996] 2 All ER 714 at 726-728). It is however, something on which the Human Rights Act 1998, when it comes into force, may have a bearing.

64. It is axiomatic that a public authority which derives its existence and its powers from statute cannot validly act outside those powers. This is the familiar ultra vires doctrine adopted by public law from company law (Colman v Eastern Counties Railway Co Ltd (1846) 16 LJCh 73). Since such powers will ordinarily include anything fairly incidental to the express remit, a statutory body may lawfully adopt and follow policies (British Oxygen Co Ltd v Ministry of Technology [1970] 3 All ER 165, [1971] AC 610) and enter into formal undertakings. But since it cannot abdicate its general remit, not only must it remain free to change policy, but its undertakings are correspondingly open to modification or abandonment. The recurrent question is when and where and how the courts are to intervene to protect the public from unwarranted harm in this process. The problem can readily be seen to go wider than the exercise of statutory powers. It may equally arise in relation to the exercise of the prerogative power, which at least since the decision in R v Criminal Injuries Compensation Board, ex p Lain [1967] 2 All ER 770, [1967] 2 QB 864 has been subject to judicial review, and in relation to private monopoly powers (R v Panel on Take-overs and Mergers, ex p Datafin plc [1987] 1 All ER 564, [1987] QB 815).

65. The court's task in all these cases is not to impede executive activity but to reconcile its continuing need to initiate or respond to change with the legitimate interests or expectations of citizens or strangers who have relied, and have been justified in relying, on a current policy or an extant promise. The critical question is by what standard the court is to resolve such conflicts. It is when one examines the implications for a case like the present of the proposition that so long as the decision-making process has been lawful, the court's only ground of intervention is the intrinsic rationality of the decision, that the problem becomes apparent. Rationality, as it has developed in modern public law, has two faces: one is the barely known decision which simply defies comprehension; the other is a decision which can be seen to have proceeded by flawed logic (though this can often be equally well allocated to the intrusion of an irrelevant factor). The present decision may well pass a rationality test; the health authority knew of the promise and its seriousness; it was aware of its new policies and the reasons for them; it knew that one had to yield, and it made a choice which, whatever else can be said of it, may not easily be challenged as irrational. As Lord Diplock said in Secretary of State for Education and Science v Tameside Metropolitan Borough [1976] 3 All ER 665 at 695, [1977] AC 1014 at 1064:

'The very concept of administrative discretion involves a right to choose between more than one possible course of action on which there is room for reasonable people to hold differing opinions as to which is to be preferred.'

But to limit the court's power of supervision to this is to exclude from consideration another aspect of the decision which is equally the concern of the law.

66. In the ordinary case there is no space for intervention on grounds of abuse of power once a rational decision directed to a proper purpose has been reached by lawful process. The present class of case is visibly different. It involves not one but two lawful exercises of power (the promise and the policy change) by the same public authority, with consequences for individuals trapped between the two. The policy decision may well, and often does, make as many exceptions as are proper and feasible to protect individual expectations. The departmental decision in Hamble Fisheries is a good example. If it does not, as in the Unilever case, the court is there to ensure that the power to make and alter policy has not been abused by unfairly frustrating legitimate individual expectations. In such a situation a bare rationality test would constitute the public authority judge in its own cause, for a decision to prioritise a policy change over legitimate expectations will almost always be rational from where the authority stands, even if objectively it is arbitrary or unfair. It is in response to this dilemma that two distinct but related approaches have developed in the modern cases.

67. One approach is to ask, not whether the decision is ultra vires in the restricted Wednesbury sense, but whether, for example through unfairness or arbitrariness, it amounts to an abuse of power. The leading case on the existence of this principle is R v IRC, ex p Preston [1985] 2 All ER 327, [1985] AC 835. It concerned an allegation, not in the event made out, that the IRC had gone back impermissibly on their promise not to re-investigate certain aspects of an individual taxpayer's affairs. Lord Scarman, expressing his agreement with the single fully reasoned speech (that of Lord Templeman) advanced a number of important general propositions. First, he said ([1985] 2 All ER 327 at 329, [1985] AC 835 at 851):

'. . . I must make clear my view that the principle of fairness has an important place in the law of judicial review, and that in an appropriate case it is a ground on which the court can intervene to quash a decision made by a public officer or authority in purported exercise of a power conferred by law.'

Second, Lord Scarman reiterated, citing the decision of the House in IRC v National Federation of Self-Employed and Small Businesses Ltd [1981] 2 All ER 93, [1982] AC 617, that a claim for judicial review may arise where the commissioners have failed to discharge their statutory duty to an individual or 'have abused their powers or acted outside them'. Third, that 'unfairness in the purported exercise of a power can be such that it is an abuse or excess of the power'.

68. It is evident from these passages and from Lord Scarman's further explanation of them that, in his view at least, it is unimportant whether the unfairness is analytically within or beyond the power conferred by law: on either view public law today reaches it. The same approach was taken by Lord Templeman ([1985] 2 All ER 327 at 337, [1985] AC 835 at 862):

'Judicial review is available where a decision-making authority exceeds its powers, commits an error of law, commits a breach of natural justice, reaches a decision which no reasonable tribunal could have reached or abuses its powers.'

69. Abuses of power may take many forms. One, not considered in the Wednesbury case (even though it was arguably what the case was about), was the use of a power for a collateral purpose. Another, as cases like Preston now make clear, is reneging without adequate justification, by an otherwise lawful decision, on a lawful promise or practice adopted towards a limited number of individuals. There is no suggestion in Preston or elsewhere that the final arbiter of justification, rationality apart, is the decision-maker rather than the court. Lord Templeman ([1985] 2 All ER 327 at 339-340, [1985] AC 835 at 864-866) reviewed the law in extenso, including the classic decisions in Laker Airways Ltd v Dept of Trade [1977] 2 All ER 182, [1977] QB 643; Padfield v Minister of Agriculture Fisheries and Food [1968] 1 All ER 694, [1968] AC 997; Congreve v Home Office [1976] 1 All ER 697, [1976] QB 629 and HTV Ltd v Price Commission [1976] ICR 170 at 189 ('It is a commonplace of modern law that such bodies must act fairly and that the courts have power to redress unfairness' (per Scarman LJ).

He reached this conclusion ([1985] 2 All ER 327 at 341, [1985] AC 835 at 866-867):

'In principle I see no reason why the taxpayer should not be entitled to judicial review of a decision taken by the commissioners if that decision is unfair to the taxpayer because the conduct of the commissioners is equivalent to a breach of contract or a breach of representation. Such a decision falls within the ambit of an abuse of power for which in the present case judicial review is the sole remedy and an appropriate remedy. There may be cases in which conduct which savours of breach of contract or breach of representation does not constitute an abuse of power; there may be circumstances in which the court in its discretion might not grant relief by judicial review notwithstanding conduct which savours of breach of contract or breach of representation. In the present case, however, I consider that the taxpayer is entitled to relief by way of judicial review for "unfairness" amounting to abuse of power if the commissioners have been guilty of conduct equivalent to a breach of contract or breach of representation on their part.'

The entire passage, too long to set out here, merits close attention. It may be observed that Lord Templeman's final formulation, taken by itself, would allow no room for a test of overriding public interest. This, it is clear, is because of the facts then before the House. In a case such as the present, the question posed in the HTV case remains live.

70. This approach, in our view, embraces all the principles of public law which we have been considering. It recognises the primacy of the public authority both in administration and in policy development but it insists, where these functions come into tension, upon the adjudicative role of the court to ensure fairness to the individual. It does not overlook the passage in the speech of Lord Browne-Wilkinson in R v Hull University Visitor, ex p Page [1993] 1 All ER 97 at 107, [1993] AC 682 at 701, that the basis of the 'fundamental principle that the courts will intervene to ensure that the powers of public decision making bodies are exercised lawfully' is the Wednesbury limit on the exercise of powers; but it follows the authority not only of Preston but of Lord Scarman's speech in Nottinghamshire CC v Secretary of State for the Environment [1986] 1 All ER 199 at 203, [1986] AC 240 at 249, in treating a power which is abused as a power which has not been lawfully exercised.

71. Fairness in such a situation, if it is to mean anything, must for the reasons we have considered include fairness of outcome. This, in turn, is why the doctrine of legitimate expectation has emerged as a distinct application of the concept of abuse of power in relation to substantive as well as procedural benefits, representing a second approach to the same problem. If this is the position in the case of the third category, why is it not also the position in relation to the first category? May it be (though this was not considered in Findlay or Hargreaves) that, when a promise is made to a category of individuals who have the same interest, it is more likely to be considered to have binding effect than a promise which is made generally or to a diverse class, when the interests of those to whom the promise is made may differ or, indeed, may be in conflict? Legitimate expectation may play different parts in different aspects of public law. The limits to its role have yet to be finally determined by the courts. Its application is still being developed on a case-by-case basis. Even where it reflects procedural expectations, for example concerning consultation, it may be affected by an overriding public interest. It may operate as an aspect of good administration, qualifying the intrinsic rationality of policy choices. And without injury to the Wednesbury doctrine, it may furnish a proper basis for the application of the new established concept of abuse of power.

72. A full century ago in the seminal case of Kruse v Johnson [1898] 2 QB 91 at 99 Lord Russell of Killowen CJ set the limits of the courts' benevolence towards local government bylaws at those which were manifestly unjust, partial, made in bad faith or so gratuitous and oppressive that no reasonable person could think them justified. While it is the latter two classes which reappear in the decision of this court in Associated Provincial Picture Houses Ltd v Wednesbury Corp [1947] 2 All ER 680, [1948] 1 KB 225, the first two are equally part of the law. Thus, in R v IRC, ex p MFK Underwriting Agencies Ltd [1990] 1 All ER 91, [1990] 1 WLR 1545 a Divisional Court (Bingham LJ and Judge J) rejected on the facts a claim for the enforcement of a legitimate expectation in the face of a change of practice by the Inland Revenue. But having set out the need for certainty of representation, Bingham LJ went on ([1990] 1 All ER 91 at 110-111, [1990] 1 WLR 1545 at 1569):

'In so stating these requirements I do not, I hope, diminish or emasculate the valuable developing doctrine of legitimate expectation. If a public authority so conducts itself as to create a legitimate expectation that a certain course will be followed it would often be unfair if the authority were permitted to follow a different course to the detriment of one who entertained the expectation, particularly if he acted on it. If in private law a body would be in breach of contract in so acting or estopped from so acting a public authority should generally be in no better position. The doctrine of legitimate expectation is rooted in fairness.'

73. This approach, which makes no formal distinction between procedural and substantive unfairness, was expanded by reference to the extant body of authority by Simon Brown LJ in R v Devon CC, ex p Baker and Johns (1992) 11 BMLR 141 at 156-157, [1995] 1 All ER 73 at 89. He identified two categories of substantive legitimate expectation recognised by modern authority:

'1. Sometimes the phrase is used to denote a substantive right: an entitlement that the claimant asserts cannot be denied him. It was used in this sense and the assertion upheld in cases such as R v Secretary of State for the Home Dept, ex p Asif Mahmood Khan [1985] 1 All ER 40, [1984] 1 WLR 1337 and R v Secretary of State for the Home Dept, ex p Ruddock [1987] 2 All ER 518, [1987] 1 WLR 1482. It was used in the same sense but unsuccessfully in, for instance, R v Board of Inland Revenue, ex p MFK Underwriting Agencies Ltd [1990] 1 All ER 91, [1990] 1 WLR 1545, and R v Jockey Club, ex p RAM Racecourses Ltd [1993] 2 All ER 225, [1991] 3 Admin LR 262. These various authorities show that the claimant's right will only be found established when there is a clear and unambiguous representation upon which it was reasonable for him to rely. Then the administrator or other public body will be held bound in fairness by the representation made unless only its promise or undertaking as to how its power would be exercised is inconsistent with the statutory duties imposed upon it. The doctrine employed in this sense is akin to an estoppel. In so far as the public body's representation is communicated by way of a stated policy, this type of legitimate expectation falls into two distinct sub-categories: cases in which the authority are held entitled to change their policy even so as to affect the claimant, and those in which they are not. An illustration of the former is R v Torbay BC, ex p Cleasby [1991] COD 142; of the latter, ex p Khan.

2. Perhaps more conventionally the concept of legitimate expectation is used to refer to the claimant's interest in some ultimate benefit which he hopes to retain (or, some would argue, attain). Here, therefore, it is the interest itself rather than the benefit that is the substance of the expectation. In other words, the expectation arises not because the claimant asserts any specific right to a benefit but rather because his interest in it is one that the law holds protected by the requirements of procedural fairness -- the law recognises that the interest cannot properly be withdrawn (or denied) without the claimant being given an opportunity to comment and without the authority communicating rational grounds for any adverse decision. Of the various authorities drawn to our attention, Schmidt v Secretary of State for Home Affairs [1969] 1 All ER 904, [1969] 2 Ch 149, O'Reilly v Mackman [1982] 3 All ER 1124, [1983] 2 AC 237, and the recent decision of Roch J in R v Rochdale Metropolitan BC, ex p Schemet [1993] 1 FCR 306, are clear examples of this head of legitimate expectation.'

Simon Brown LJ has not in that passage referred expressly to the situation where the individual can claim no higher expectation than to have his individual circumstances considered by the decision maker in the light of the policy then in force. This is not surprising because this entitlement, which can also be said to be rooted in fairness, adds little to the standard requirements of any exercise of discretion: namely that the decision will take into account all relevant matters which here will include the promise or other conduct giving rise to the expectation and that if the decision maker does so, the courts will not interfere except on the basis that the decision is wholly unreasonable. It is the classic Wednesbury situation, not because the expectation is substantive but because it lacks legitimacy.

74. Nowhere in this body of authority, nor in Preston, nor in Findlay, is there any suggestion that judicial review of a decision which frustrates a substantive legitimate expectation is confined to the rationality of the decision. But in R v Secretary of State for the Home Dept, ex p Hargreaves [1997] 1 All ER 397, [1997] 1 WLR 906 Hirst LJ (with whom Peter Gibson LJ agreed) was persuaded to reject the notion of scrutiny for fairness as heretical, and Pill LJ to reject it as 'wrong in principle'.

75. Hargreaves concerned prisoners whose expectations of home leave and early release were not to be fulfilled by reason of a change of policy. Following Re Findlay [1984] 3 All ER 801, [1985] AC 318, this court held that such prisoners' only legitimate expectation was that their applications would be considered individually in the light of whatever policy was in force at the time: in other words, the case came into the first category. This conclusion was dispositive of the case. What Hirst LJ went on to say under the head of 'The proper approach for the court to the Secretary of State's decision' was, therefore, obiter. However, Hirst LJ accepted in terms the submission of leading counsel for the Home Secretary that, beyond review on Wednesbury grounds, the law recognised no enforceable legitimate expectation of a substantive benefit. In relation to the decision in Hamble Fisheries, he said ([1997] 1 All ER 397 at 412, [1997] 1 WLR 906 at 921): 'Mr Beloff characterised Sedley J's approach as heresy, and in my judgment he was right to do so. On matters of substance (as contrasted with procedure) Wednesbury provides the correct test.'

A number of learned commentators have questioned this conclusion (see eg PP Craig 'Substantive legitimate expectations and the principles of judicial review' in M Andenas (ed) English Public Law and the Common Law of Europe (1998); TRS Allan 'Procedure and Substance in judicial review' [1997] CLJ 246; S Foster 'Legitimate expectations and prisoners' rights' (1997) 60 MLR 727).

76. Hargreaves can, in any event, be distinguished from the present case. Mr Gordon has sought to distinguish it on the ground that the present case involves an abuse of power. On one view, all cases where proper effect is not given to a legitimate expectation involve an abuse of power. Abuse of power can be said to be but another name for acting contrary to law. But the real distinction between Hargreaves and this case is that in this case it is contended that fairness in the statutory context required more of the decision maker than in Hargreaves where the sole legitimate expectation possessed by the prisoners had been met. It required the health authority, as a matter of fairness, not to resile from their promise unless there was an overriding justification for doing so. Another way of expressing the same thing is to talk of the unwarranted frustration of a legitimate expectation and thus an abuse of power or a failure of substantive fairness. Again, the labels are not important except that they all distinguish the issue here from that in Hargreaves. They identify a different task for the court from that where what is in issue is a conventional application of policy or exercise of discretion. Here the decision can only be justified if there is an overriding public interest. Whether there is an overriding public interest is a question for the court.

77. The cases decided in the European Court of Justice cited in Hamble Fisheries all concern policies or practices conferring substantive benefits from which member states were not allowed to resile when the policy or practice was altered. In this country R v Secretary of State for the Home Dept, ex p Ruddock [1987] 2 All ER 518, [1987] 1 WLR 1482 and R v Secretary of State for the Home Dept, ex p Khan [1985] 1 All ER 40, [1984] 1 WLR 1337 were cited as instances of substantive legitimate expectations to which the courts were if appropriate prepared to give effect. Reliance was also placed, as we would place it, on Lord Diplock's carefully worded summary in Council of Civil Service Unions v Minister for Civil Service [1984] 3 All ER 935 at 949, [1985] AC 374 at 408 of the contemporary heads of judicial review. They included benefits or advantages which the applicant can legitimately expect to be permitted to continue to enjoy. Not only did Lord Diplock not limit these to procedural benefits or advantages; he referred expressly to Findlay v Secretary of State for the Home Dept [1984] 3 All ER 801, [1985] 1 AC 318 (a decision in which he had participated) as an example of a case concerning a claim to a legitimate expectation -- plainly a substantive one, albeit that the claim failed. One can readily see why: Lord Scarman's speech in Findlay is predicated on the assumption that the courts will protect a substantive legitimate expectation if one is established; and Taylor J so interpreted it in Ruddock. None of these cases suggests that the standard of review is always limited to bare rationality, though none developed it as the revenue cases have done.

78. It is from the revenue cases that, in relation to the third category, the proper test emerges. Thus, in R v IRC, ex p Unilever plc [1996] STC 681, [1996] COD 421 this court concluded that for the Crown to enforce a time limit which for years it had not insisted upon would be so unfair as to amount to an abuse of power. As in other tax cases, there was no question of the court's deferring to the Inland Revenue's view of what was fair. The court also concluded that the Inland Revenue's conduct passed the 'notoriously high' threshold of irrationality; but the finding of abuse through unfairness was not dependent on this.

79. It is worth observing that this was how the leading textbook writers by the mid- 1990s saw the law developing. In the (still current) seventh edition of Wade and Forsyth Administrative Law (1994) the authors reviewed a series of modern cases and commented (p 419):

'These are revealing decisions. They show that the courts now expect government departments to honour their statements of policy or intention or else to treat the citizen with the fullest personal consideration. Unfairness in the form of unreasonableness is clearly allied to unfairness by violation of natural justice. It was in the latter context that the doctrine of legitimate expectation was invented, but it is now proving to be a source of substantive as well as of procedural rights. Lord Scarman [in Preston] has stated emphatically that unfairness in the purported exercise of power can amount to an abuse or excess of power, and this may become an important general doctrine.'

To similar effect is De Smith, Woolf and Jowell Judicial Review of Administrative Action (5th edn, 1995) para 13-035. Craig Administrative Law (3rd edn, 1994) pp 672-675, links the issue, as Schwarze does (European Administrative Law (1992)), to the fundamental principle of legal certainty.

80. In Unilever Simon Brown LJ proposed a valuable reconciliation of the existing strands of public law ([1996] STC 681 at 695):

'"Unfairness amounting to an abuse of power" as envisaged in Preston v IRC [1985] 2 All ER 327, [1985] AC 835 and the other Revenue cases is unlawful not because it involves conduct such as would offend some equivalent private law principle, not principally indeed because it breaches a legitimate expectation that some different substantive decision will be taken, but rather because either it is illogical or immoral or both for a public authority to act with conspicuous unfairness and in that sense abuse its power. As Lord Donaldson MR said in R v Independent Television Commission, ex p TSW Broadcasting Ltd (1992) Times, 7 February: "The test in public law is fairness, not an adaptation of the law of contract or estoppel." In short, I regard the MFK category of legitimate expectation as essentially but a head of Wednesbury unreasonableness, not necessarily exhaustive of the grounds upon which a successful substantive unfairness challenge may be based.' (My emphasis.)

81. For our part, in relation to this category of legitimate expectation, we do not consider it necessary to explain the modern doctrine in Wednesbury terms, helpful though this is in terms of received jurisprudence (cf Dunn LJ in R v Secretary of State for the Home Dept, ex p Khan [1985] 1 All ER 40 at 52, [1984] 1 WLR 1337 at 1352: 'an unfair action can seldom be a reasonable one'). We would prefer to regard the Wednesbury categories themselves as the major instances (not necessarily the sole ones: see Council of Civil Service Unions v Minister for the Civil Service [1984] 3 All ER 935 at 950, [1985] AC 374 at 410, per Lord Diplock) of how public power may be misused. Once it is recognised that conduct which is an abuse of power is contrary to law, its existence must be for the court to determine.

82. The fact that the court will only give effect to a legitimate expectation within the statutory context in which it has arisen should avoid jeopardising the important principle that the executive's policy-making powers should not be trammelled by the courts (see Hughes v Dept of Health and Social Security [1985] AC 766 at 788, [1985] 2 WLR 866 at 875, per Lord Diplock). Policy being (within the law) for the public authority alone, both it and the reasons for adopting or changing it will be accepted by the courts as part of the factual data -- in other words, as not ordinarily open to judicial review. The court's task -- and this is not always understood -- is then limited to asking whether the application of the policy to an individual who has been led to expect something different is a just exercise of power. In many cases the authority will already have considered this and made appropriate exceptions (as was envisaged in British Oxygen Co Ltd v Ministry of Technology, [1970] 3 All ER 165, [1971] AC 610 and as had happened in Hamble Fisheries), or resolved to pay compensation where money alone will suffice. But where no such accommodation is made, it is for the court to say whether the consequent frustration of the individual's expectation is so unfair as to be a misuse of the authority's power.

Fairness and the decision to close

83. How are fairness and the overriding public interest in this particular context to be judged? The question arises concretely in the present case. Mr Goudie argued, with detailed references, that all the indicators, apart from the promise itself, pointed to an overriding public interest, so that the court ought to endorse the health authority's decision. Mr Gordon contended, likewise with detailed references, that the data before the health authority were far from uniform. But this is not what matters. What matters is that, having taken it all into account, the health authority voted for closure in spite of the promise. The propriety of such an exercise of power should be tested by asking whether the need which the health authority judged to exist to move Miss Coughlan to a local authority facility was such as to outweigh its promise that Mardon House would be her home for life.

84. That a promise was made is confirmed by the evidence of the health authority that:

'. . . the Applicant and her fellow residents were justified in treating certain statements made by the Authority's predecessor, coupled with the way in which the Authority's predecessor conducted itself at the time of the residents' move from Newcourt Hospital, as amounting to an assurance that, having moved to Mardon House, Mardon House would be a permanent home for them.'

And the letter of 7 June 1994 sent to the residents by Mr Peter Jackson, the then general manager of the predecessor of the health authority, following the withdrawal of John Grooms stated:

'During the course of a meeting yesterday with Ross Bentley's father, it was suggested that each of the former Newcourt residents now living at Mardon House would appreciate a further letter of reassurance from me. I am writing to confirm therefore, that the health authority has made it clear to the Community Trust that it expects the Trust to continue to provide good quality care for you at Mardon House for as long as you choose to live there. I hope that this will dispel any anxieties you may have arising from the forthcoming change in management arrangements, about which I wrote to you recently.'

As has been pointed out by the health authority, the letter did not actually use the expression 'home for life'.

85. The health authority had, according to its evidence, formed the view that it should give considerable weight to the assurances given to Miss Coughlan; that those assurances had given rise to expectations which should not, in the ordinary course of things, be disappointed; but that it should not treat those assurances as giving rise to an absolute and unqualified entitlement on the part of the Miss Coughlan and her co-residents, since that would be unreasonable and unrealistic; and that -

'if there were compelling reasons which indicated overwhelmingly that closure was the reasonable and -- other things being equal -- the right course to take, provided that steps could be taken to meet the Applicant's (and her fellow residents') expectations to the greatest degree possible following closure, it was open to the Authority, weighing up all these matters with care and sensitivity, to decide in favour of the option of closure.'

Although the first consultation paper made no reference to the 'home for life' promise, it was referred to in the second consultation paper as set out above.

86. It is denied in the health authority's evidence that there was any misrepresentation at the meeting of the board on 7 October 1998 of the terms of the 'home for life' promise. It is asserted that the board had taken the promise into account; that members of the board had previously seen a copy of Mr Jackson's letter of 7 June 1994, which, they were reminded, had not used the word 'home'; and that every board member was well aware that, in terms of its fresh decision-making, the starting point was that the Newcourt patients had moved to Mardon on the strength of an assurance that Mardon would be their home as long as they chose to live there. This was an express promise or representation made on a number of occasions in precise terms. It was made to a small group of severely disabled individuals who had been housed and cared for over a substantial period in the health authority's predecessor's premises at Newcourt. It specifically related to identified premises which, it was represented, would be their home for as long as they chose. It was in unqualified terms. It was repeated and confirmed to reassure the residents. It was made by the health authority's predecessor for its own purposes, namely to encourage Miss Coughlan and her fellow residents to move out of Newcourt and into Mardon House, a specially built substitute home in which they would continue to receive nursing care. The promise was relied on by Miss Coughlan. Strong reasons are required to justify resiling from a promise given in those circumstances. This is not a case where the health authority would, in keeping the promise, be acting inconsistently with its statutory or other pubic law duties. A decision not to honour it would be equivalent to a breach of contract in private law.

87. The health authority treated the promise as the 'starting point' from which the consultation process and the deliberations proceeded. It was a factor which should be given 'considerable weight', but it could be outweighed by 'compelling reasons which indicated overwhelmingly that closure was the reasonable and the right course to take'. The health authority, though 'mindful of the history behind the residents' move to Mardon House and their understandable expectation that it would be their permanent home', formed the view that there were 'overriding reasons' why closure should none the less proceed. The health authority wanted to improve the provision of reablement services and considered that the mix of a long-stay residential service and a reablement service at Mardon House was inappropriate and detrimental to the interests of both users of the service. The acute reablement service could not be supported there without an uneconomic investment which would have produced a second class reablement service. It was argued that there was a compelling public interest which justified the health authority's prioritisation of the reablement service.

88. It is, however, clear from the health authority's evidence and submissions that it did not consider that it had a legal responsibility or commitment to provide a home, as distinct from care or funding of care, for the applicant and her fellow residents. It considered that, following the withdrawal of the John Grooms Association, the provision of care services to the current residents had become 'excessively expensive', having regard to the needs of the majority of disabled people in the authority's area and the 'insuperable problems' involved in the mix of long-term residential care and reablement services at Mardon House. Mardon House had, contrary to earlier expectations, become -

'a prohibitively expensive white elephant. The unit was not financially viable. Its continued operation was dependent upon the Authority supporting it at an excessively high cost. This did not represent value for money and left fewer resources for other services.'

The health authority's attitude was that:

'It was because of our appreciation of the residents' expectation that they would remain at Mardon House for the rest of their lives that the Board agreed that the Authority should accept a continuing commitment to finance the care of the residents of Mardon for whom it was responsible.'

But the cheaper option favoured by the health authority misses the essential point of the promise which had been given. The fact is that the health authority has not offered to the applicant an equivalent facility to replace what was promised to her. The health authority's undertaking to fund her care for the remainder of her life is substantially different in nature and effect from the earlier promise that care for her would be provided at Mardon House. That place would be her home for as long as she chose to live there.

89. We have no hesitation in concluding that the decision to move Miss Coughlan against her will and in breach of the health authority's own promise was in the circumstances unfair. It was unfair because it frustrated her legitimate expectation of having a home for life in Mardon House. There was no overriding public interest which justified it. In drawing the balance of conflicting interests the court will not only accept the policy change without demur but will pay the closest attention to the assessment made by the public body itself. Here, however, as we have already indicated, the health authority failed to weigh the conflicting interests correctly. Furthermore, we do not know (for reasons we will explain later) the quality of the alternative accommodation and services which will be offered to Miss Coughlan. We cannot pre-judge what would be the result if there was on offer accommodation which could be said to be reasonably equivalent to Mardon House and the health authority made a properly considered decision in favour of closure in the light of that offer. However, absent such an offer, here there was unfairness amounting to an abuse of power by the health authority.