1 EQUITY’S ROVING COMMISSION IN ADMINISTRATIVE LAW: An analysis of the present and potential role of equity in the relationship between local authorities and their service users DAVID JOHN SYKES A thesis submitted for the degree of Doctor of Philosophy School of Law University of Essex 2017 2 CONTENTS ABSTRACT This thesis explores the use of equity and its principles in the field of public law. It asks whether the relationship between local authorities and their service users can properly be understood as being a fiduciary relationship. In considering this question the thesis examines the extent to which the relationship is analogous to trusteeship or whether it is some other sui generis category. This requires exploration of core elements of trust and loyalty and analysis, within a local government context of the debate as to whether fiduciary duties are confined to having a proscriptive role or whether, as some advocate they have a wider prescriptive function. The relationship between local authorities and their service users is not considered to be a fiduciary relationship within the traditional class of relationships so classified. Notwithstanding, there are instances within that relationship where the characteristics resemble in part application of a sui generis label. For example, in the realm of local authorities and their interaction with the elderly, child care and youth counselling services it is possible to apply a quasi - trusteeship role. This categorisation cannot however be extended to the majority of interactions between local authorities and their service users which usually fall within a contract or tortious setting. The main reason in not being able to identify the relationship between local authorities and their service users as fully fiduciary is the inability to point to a central core of loyalty between the parties which is so necessary for a finding of the 3 existence of a fiduciary relationship. The loyalty inhibitor is the polycentric essence of much of local authority decision making, which is made in a very diverse community group often with different complex needs and aspirations all clambering for attention. Further, as local authorities are public bodies they must accommodate the ‘public interest’ in any decision making process and outcome. These factors combine to make a very different decision making environment than the way fiduciary obligations can be exercised in private law and makes the hurdles higher for an exercise of translation to the public law sphere. The purpose of this analysis is to explore whether the roving commission of equity has any application to the public law field. Has equity died and shrivelled, or does equity still have the ability to flourish and accommodate new situations and changes in social morals and norms, ‘yet maintain its core values and norms, without which no society can survive, let alone flourish.’?1 Notwithstanding, these hurdles this author considers that equity still has a role to play in public law, none more so than in the day to day decision making of local authorities as well as in judicial review proceedings. Equity can bring a contextual approach so necessary when substantive review is applied. Equity has proved to be a robust flexible adaptable tool, even in a complex modern environment. For example, the remedies it has fashioned of injunctions, declaratory relief and freezing orders to mention a few , as well as aiding the common law in its application of trust principles to a deserted wife’s equity, where the title was in one party’s sole name. 1 Professor Tamar Frankel, ‘Fiduciary Law in the Twenty-First Century‘(2011) 91 BULR 1289, 1290 4 This author espouses a principle of stewardship which can be applied as an additional substantive review tool in the judicial tool box, along with Wednesbury and proportionality. Structuring substantive review is a major current debate in public law both judicially and academically: there is no valid reason why ethical principles such as stewardship-of person, place, property and purpose should not be a valid contributory player. 5 ACKNOWLEDGEMENTS I would like to express my deepest gratitude to Professor Maurice Sunkin and Ms Penny Brearey-Horne, for supervising my dissertation, and their constant support throughout my doctrinal journey. They skilfully challenged my thinking on my research topic, while respecting my own vision of equity’s potential use in public law and the various directions I wanted to take the project. Professor Sunkin’s insight and comments on public law and likewise, Ms Penny Brearey-Horne on aspects of equity and fiduciary law were an invaluable resource for the development of my research. I would also like to thank Professor Ellie Palmer and Dr Richard Cornes for dealing with my Supervisory Board Meetings. My special thanks to my examiners Professor Judith Bray and Dr Peter Luther. I record my thanks to Dr Desmond Thomas for his helpful series of lectures on PhD writing. The IT department at Essex University, led by Russell Hannan, (particularly Jo Brammer-Walsh), who were always there when I needed help with computer problems. I must also mention Sam Davey (now Dr Davey) and Chris Luff, who have been faithful friends during my PhD journey-their friendship and support was invaluable. Thanks also go to Essex University itself, for without allowing me to study for my PhD (at such an advanced age) my dream would have remained unfulfilled. I also record my sincere gratitude to the late Professor Aubrey Diamond, who gave me an opportunity to study law and for my equity and trust tutor at University a young David Hayton (now Hon Mr Justice David Hayton). Lastly, I record a special thankyou to my long suffering wife Eileen for all the patience and love she has shown throughout the four years of study, with its inevitable ‘ups and downs’. I will never be able to repay such devotion. 6 CHAPTER ONE INTRODUCTION 15 1.1 The topic of this thesis-the research question and its importance 15 1.2 The relevance of the research 16 1.3 Methodology: 28 1.3.1 Doctrinal analysis 28 1.3.2 Case Study approach 29 1.3.3 Comparative analysis 31 1.4 Thesis Overview 32 1.5 Limitations of the research 35 CHAPTER TWO THE THEORETICAL UNDERPINNINGS OF THE FIDUCIARY DOCTRINE 37 2.1 Introduction 37 2.2 Categories of the fiduciary relationship 39 2.2.1 Established or ‘per se’ or status categories 41 2.2.2 Diagnostic category 41 2.2.3 Contextual functional category 42 2.2.4 Summary 44 2.3. Theoretical features of the Fiduciary relationship 45 2.3.1 Situation-specific approach 45 7 2.3.2 The Categorical Open-Ended approach 48 2.3.3 A Functionalist approach 51 2.4 Misapplication of Fiduciary Doctrine 52 2.5 Fiduciary Theories 54 2.5.1 Overview 54 2.5.2 Voluntary Assumption theory 57 2.5.2.1 Voluntary Assumption theory in a Local Government context 64 2.5.3 Entrustment theory 65 2.5.3.1 Entrustment theory in a Local Government context 66 2.5.4 Incomplete contract theory/Contractarian Theory 67 2.5.4.1 Incomplete contract theory in a Local Government context 73 2.5.5 Property theory 74 2.5.5.1 Property theory in a Local Government context 75 2.5.6 Reliance theory 78 2.5.6.1 Reliance theory in a Local Government context 79 2.5.7 Power theory – inequality and vulnerability 80 2.5.7.1 Power theory in a Local Government context 85 2.5.8 Discretionary theory 87 2.5.8.1 Discretionary theory in a Local Government context 88 2.5.9 Utility theory 90 2.5.9.1 Utility theory in a Local Government context 91 2.5.10 Descriptive theories 92 2.5.11 Cognitive theory of Fiduciary Relationships 93 8 2.5.11.1Cognitivetheory in a Local Government context 94 2.5.12 Instrumental description 95 2.6 Conclusion 95 CHAPTER THREE FIDUCIARY OBLIGATIONS-Defining Fiduciary Duties 98 3. 1 Introduction 98 3. 2 The Nature of Fiduciary Duty 101 3.2.1 Proscriptive Duties 102 3.2.2 Prescriptive Duties 106 3.2.3 Fiduciary duties as both Proscriptive and Prescriptive 107 3.3 Loyalty 110 3.4 Good faith 119 3.5 Duty of Care 124 3.6 Trust and Obedience 129 3.6.1 Trust 129 3.6.2 Obedience-A Trinitarian alternative 132 3.7 Conceptions of Loyalty, Trust and Obedience in a local Government setting 133 3.7.1 Loyalty and Polycentric Decision-Making 133 3.7.2 Loyalty as Prioritising Interests 135 3.7.3 Sole or best interests 136 3.7.4 Loyalty, Trust and Expectations 138 3.8 Conclusion 141 9 CHAPTER FOUR CONCEPT TRANSLATION –CAN CONCEPTS OF EQUITY BE TRANSLATED INTO PUBLIC LAW? 145 4.1 Introduction 145 4.2 Problem of ‘fit’ 148 4.2.1 Doctrinal borrowing 149 4.2.2 Remedial problems 149 4.2.3 Identifying the Nature and functions of a Statutory Corporation 151 4.2.4 Commercial Functions 153 4.2.5 The ‘fiduciary’ nature of local authority functions 156 A PRIVATE TRUST MODEL 157 4.3 Identifying an appropriate private trust model 157 4.3.1 Fixed trusts 157 4.3.2 Discretionary trusts 158 4.3.3 Non-Charitable purpose trusts 159 4.3.4 Peoples trusts’ for a purpose 160 4.3.5 Charitable trusts 162 4.4 Transposing trusts into the public sphere: Specific issues 162 Certainty of objects 163 4.4.1 Identifying the class of beneficiaries 163 4.4.1.1 Conceptual Certainty 165 4.4.1.2 Administrative unworkability 166 4.4.2 The Shifting nature of the beneficiary user class in a local 10 Government context 168 Polycentrism 4.4.3 Polycentric issues 171 4.4.3.1 Definitions of bi-polar and polycentric decision making 171 4.5 Summary-private trust model 175 A PUBLIC TRUST MODEL 178 4.6 Introduction 178 4.6.1 Historical context of Public Trusts 182 4.6.2 Turnpike Trusts 184 4.6.2.1 The Municipal Corporations Act 1835 191 4.6.3 The Public Trust Doctrine halted 194 4.7 Summary-Public Trusts 200 A STEWARDSHIP MODEL 201 4.8 A Stewardship Perspective-a better ‘fit’ 201 4.8.1.