Bromley LBC v Greater London Council [1983] 1 AC 768

Key point
  • A mandate from the electorate is an irrelevant consideration for public bodies when exercising their discretionary powers under statute while fiduciary duty to ratepayers is a relevant consideration
Facts

Background

  • The Greater London Council (GLC), implementing an election manifesto, issued a precept to all London boroughs to levy a supplementary rate of 6.1p in the pound to enable the GLC to reduce the cost of tube and bus rides by 25% by making a grant to the London Transport Executive
  • The London Borough of Bromley applied for judicial review by way of certiorari
  • The Court of Appeal quashed the precept as void

Statutes

  • Under s3 Transport (London) Act 1969, the GLC can make grants to the LTE for any purpose
  • Under s7(3)(b) Transport (London) Act 1969, the LTE has an obligation to make good a deficit in the year following a deficit year and under s7(6), the GLC must exercise its powers in the Act with regard to LTE’s duties under s7(3)
Issue
  • Was the precept void for illegality
Held (Supreme Court)
  • Appeal dismissed; the GLC in exercising its discretionary powers had failed to consider its fiduciary duty to the ratepayers
Lord Wilberforce
  • ‘It makes no difference on the question of legality…whether the impugned action was or was not submitted to or approved by the relevant electorate: that cannot confer validity upon ultra vires action…the G.L.C. in so far as it considered that it has a commitment to bring about the reduction in fares, regardless of other considerations, misdirected itself in law.’: p. 814A
  • ‘G.L.C. cannot exercise its powers unless and until the London Transport Executive carries out that duty [defined in s7(3)] and must then do so with proper regard to its fiduciary duty to its ratepayers.’: p. 818C
  • ‘The G.L.C. could not have considered (as it was obliged to do before it could make a grant to revenue) that the L.T.E. was complying with its obligation under section 7 (3). Furthermore, in deciding to proceed to make a grant to support the fare reduction, once it became apparent that the ratepayers’ burden would be approximately doubled, it acted in breach of its fiduciary duty as defined above’: p. 820B
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