British Oxygen Co Ltd v Minister of Technology [1971] AC 610

Key point 
  • When an Act of Parliament confers unlimited discretion to the executive, the executive is free to implement a policy on its implementation provided that it nonetheless considers applications contrary to the policy
Facts
  • s13 Industrial Placements Act gave the Minister of Technology discretionary power to issue grants to industrial plants 
  • The Minister made a policy of not reimbursing products under £25
  • British Oxygen Co applied for grants for their gas cylinders which cost £20 each; their application was refused 
  • British Oxygen Co applied for judicial review on the grounds that it was unreasonable to disregard the application simply because the cylinders were under £25 each
Issue
  • Was the £25 rule within the scope of the Minister’s discretion?
  • Did laying down the £25 rule amount to an illegal fetter on the Minister’s statutory discretion
Held (House of Lords)
  • Appeal dismissed
  • The Minister had unlimited discretion on the allocation of grants under the Industrial Placements Act
  • The Minister is entitled to lay down a policy to guide the application of the grant, as long as he continues to hear opposing applications
Lord Reid

Extent of discretion

  • ‘Does the Act read as a whole indicate any policy which the Board is to follow or even give any guidance to the Board? If it does then the Board must exercise its discretion in accordance with such policy or guidance (Padfield)…But I can find nothing to guide the Board as to the circumstances in which they should pay or the circumstances in which they should not pay grants to such persons’: p. 633D – p. 634A
  • ‘There are two general grounds on which the exercise of an unqualified discretion can be attacked. It must not be exercised in bad faith, and it must not be so unreasonably exercised as to show that there cannot have been any real or genuine exercise of the discretion. But, apart from that, if the Minister thinks that policy or good administration requires the operation of some limiting rule, I find nothing to stop him.’: p. 634E

Fettering of discretion

  • ‘The general rule is that anyone who has to exercise a statutory discretion must not ‘shut his ears to an application’ (to adapt from Bankes L.J. [in Kynoch [1919] 1 KB 176] on p. 183)…There may be cases where an officer or authority ought to listen to a substantial argument reasonably presented urging a change of policy. What the authority must not do is to refuse to listen at all’: p. 625B
  • ‘a Ministry or large authority may have had to deal already with a multitude of similar applications and then they will almost certainly have evolved a policy so precise that it could well be called a rule. There can be no objection to that, provided the authority is always willing to listen to anyone with something new to say‘: p. 625B
Commentary
  • Lord Reid held that an unlimited discretion can only be subject to review on substantive grounds for bad faith and Wednesbury unreasonableness – bad faith refers to acting with improper purpose, under the ground of review of illegality
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