Farrah Ahmed: Making Sense of Judicial Review of De Facto Powers

Non-state bodies are sometimes subject to judicial review when they exercise de facto (state)powers. But why de facto powers are subject to judicial review, and how such review fits with the rest of common law judicial review doctrine remain mysterious. We need good answers to these questions given the ubiquity of non-state bodies providing services on behalf of the state. This post argues that thinking carefully about courts’ characterisation of such bodies as delegates of Parliament or the Crown helps provide these answers.

In an earlier post on this blog, I defended the ‘delegation theory of judicial review’ according to which the best internal rationale for common law judicial review doctrine is that it holds administrators to their duties qua delegates of Parliament or the Crown. That post discussed how the idea of delegation makes sense of the grounds of judicial review. This post tries to show that the idea of delegation, properly understood, also makes sense of the scope of review – particularly judicial review of de facto powers.

The argument unfolds in three steps. First, judges conceive of, and characterise, non-state bodies subject to review as delegates of Parliament or the Crown. Second, the case law (limited here to England and Wales) indicates that non-state bodies are subject to judicial review insofar as they act as such delegates. Third, the delegation theory clarifies and makes sense of the legal test for amenability of de facto powers to review.

Common Law Characterisation of De Facto Powers

Judges and scholars consistently characterise non-state bodies subject to judicial review as delegates of Parliament or the Crown. In Aga Khan,Lord Hoffmann suggested that whether ‘the Club might de facto be a surrogate organ of the government’ was relevant to amenability. Judgments in Datafin characterisethe Takeover Panel as akin to a delegate in a delegation relationship created by implicit, rather than express, understandings to explain its amenability to review. Judges characterise the set-up as ‘an implied devolution of power’ and as ‘indistinguishable in its effect from a delegation by the council of the Stock Exchange to the Panel… of its public law task’.

Later cases also implicitly and explicitly characterise non-state bodies subject to judicial review as delegates of Parliament or the Crown. In the influential case of Servite, Moses J found that Servite was not amenable to judicial review because it ‘was not acting as agent of Wandsworth (Council)’ which ‘had no power to delegate its obligations’. Burton J of the High Court in Leonard Cheshire followed Servite in using ‘true delegation’ as part of the test of amenability. The Court of Appeal inHampshire County Council v Beer also used language strongly suggestive of implicit delegation as the test of amenability: the body in question had ‘stepped into the shoes’ of the Council and was ‘taking the place of central government or local authorities’.

Non-State Bodies Reviewable When Acting as Delegates

Case law also shows that non-state bodies are subject to judicial review insofar as they act as delegates of Parliament or the Crown. Courts have paid particular attention to one marker of when non-state bodies are acting as delegates.

The maxim qui facit per alium, facit per se – he who acts through another, acts himself – suggests this mark of a delegate: in the paradigm case of delegation in law, delegates have the ability to exercise (at least some of) the legal powers of their delegators. ‘Legal power’ refers to the ability to change a person’s legal position by performing an act with the intention to change their legal position, e.g. powers to contract, marry or decide legal disputes. Delegates may be able to exercise the legal powers of their delegators directly or indirectly.

The delegator may legally devolve their powers to the delegate, as government officials regularly do to other government officials or bodies, so that the delegate has the ability to exercise the delegator’s powers directly. The case law indicates that, when deciding on amenability to judicial review, courts test for delegation with particular attention to this feature. In Leonard Cheshire, the High Court held that privately-run prisons were amenable to judicial review because they could exercise statutory powers (i.e. powers from Parliament), in contrast with charitable care homes which lacked such powers. In Partnerships for Care, the High Court identified the ‘crucial’ factor in assessing a private hospital’s amenability to review as ‘the assimilation by the housing association of the powers of the local housing authority.’ In these cases, the delegate-administrator had the ability to exercise the powers of Parliament or the Crown directly.

But courts also test for the kind of delegation in which the delegate has the ability to exercise the power of Parliament or the Crown indirectly. The delegate’s acts may consistently trigger an exercise of the delegator’s powers because the delegator has a legal or non-legal rule (e.g. a policy or social rule) of exercising these powers in response to the delegate’s act. For example, if a doctor is found guilty of misconduct by a professional body, government officials may have a policy of legally barring them from practice on the back of the professional body’s findings.

Courts have taken such indirect exercises of state power by non-state bodies as a mark that they are delegates of Parliament or the Crown (and that they are therefore amenable to judicial review).  Sir John Donaldson in Datafin affirms that bodies are amenable to review even if their determination ‘is merely one step in a process which may have the result of altering … legal rights or liability’(i.e. when they can indirectly exercise a legal power). Judges in Datafin were swayed by ‘the unspoken assumption’ that the Panel could trigger statutory powers, by the fact that bodies with statutory powers treated breach of the Takeover Code administered by the Panel as ipso facto constituting misconduct under their own rules, and the fact that the Panel was ‘supported and sustained by a periphery of statutory powers and penalties’. In other words, the court was swayed by these indicators that the Panel was a delegate of Parliament, indirectly exercising Parliament’s powers.

In a similar case, R v Advertising Standards Authority ex p The Insurance Service plc, the Advertising Standards Authority was a company whose objects included the promotion and enforcement of advertising standards. Government regulations charged the Director General of Fair Trading to consider certain complaints about advertising. But the regulations authorised the Director General to demand that the complainant demonstrate that ‘established means of dealing with such complaints’ had been invoked. The upshot was that the Director General would use his powers under the regulations if and only if a complaint to the Authority had not ‘produced a satisfactory result’, i.e., had not been complied with. Thus, failure to followthe Advertising Standards Authority’s decision would lead to the Director General of Fair Trading using her or his powers under Regulations. This was a key factor that pointed to the Authority’s susceptibility to judicial review. In other words, the Authority’s actions were amenable to judicial review in part because it possessed the ability to trigger an exercise of the powers of bodies performing statutory functions; the court was testing for delegation.

In these cases, courts found that actions of bodies – delegates with the ability to exercise, directly or indirectly, the powers of Parliament or the Crown – were amenable to judicial review.

Tests for Amenability to Judicial Review

The third step of the argument in this post is that the delegation theory fits and makes sense of the tests that courts have used for amenability to judicial review. Take the ‘statutory underpinning’ test. Post-Datafin, courts have usually required bodies subject to review to show some ‘sign of underpinning directly or indirectly by any organ or agency of the State’ (R v Football Association Ltd, ex p Football League Ltd [1993] 2 All ER 833, 848).

In Servite, the body was found not amenable to judicial reviewbecauseit did not possess ‘power … derived from statute’. Through the statutory underpinning test, the court tested whether the school had the ability to exercise any of the powers of Parliament, i.e. whether the school was a delegate of Parliament.  Here, as in other cases where the ‘statutory underpinning’ test is used, it functions as an imprecise but effective indicator of whether the body is a delegate, de facto or de jure, of Parliament or the Crown.

The delegation theory also makes sense of the but for test. In testing for amenability, courts have asked whether the body’s activities involved potential government interests such that the state would have stepped in, but for the body. Generally, delegates are appointed to perform functions that the delegator has an interest in seeing performed. If a putative delegator has no interest in the function that a putative delegate is performing, the two are in fact unlikely to be delegate and delegator. The ‘but for’ test is best understood as only an indicator of a relationship of delegation; and indeed, courts treat passing the test as neither a necessary nor sufficient condition for amenability.

Finally, the delegation theory also makes sense of why judicial review is often excluded where the challenged action is based on a contract between the claimant and defendant. When there is a contract between a non-state body and a non-state person empowering the body to act, the body is not exercising the power of Parliament or Crown. It is exercising its own contractual power based on the contract with the claimant. The exercise of this contractual power suggests that the main relationship in play is not that of the non-state body and Parliament or Crown as delegator. Thus, Lord Diplock says that such bodies are not amenable to judicial review because they are not ‘empowered by public law’ (Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, 409). We can say now, more precisely, that they were not empowered (directly or indirectly) by Parliament or the Crown.

The legal tests just discussed are helpful heuristics. The delegation theory, as developed in this post, tells judges what the heuristics are for: to identify the existence of relationships of delegation between the non-state body and Parliament or the Crown. This offers judges a coherent account of the tests, as indicators of delegation, and a way to assess the relative weight that they should place on each test.

Understanding bodies exercising de facto powers as delegates of Parliament or the Crown makes sense of judicial review doctrine. This enhanced understanding of the doctrine relating to judicial review of non-state bodies should enable better informed debate about the justifiability of such review, as well as the justifiability of any expansion of review to monopolies or other powerful non-state actors.

Farrah Ahmed is a Professor at Melbourne Law School, the University of Melbourne. This post draws on a paper published at the Modern Law Review. The definitive version of the paper and full citations are available here.

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