Referral decision by professional body not amenable to judicial review

Summary

The High Court has held that a decision by a professional body to refer a complaint against a member to a disciplinary board was not amenable to judicial review (R (Hannah) v Chartered Institute of Taxation [2021] EWHC 1069 (Admin)).

Key points

• The approach taken by the Courts when ascertaining whether an organisation is a public body for the purposes of judicial review is to look at the source and nature of the power being exercised by the body in order to ascertain whether it exercises public law functions, or whether the exercise of the power has public law consequences.
• If the source of the power is contained in legislation, the body in question generally will be amenable to judicial review. If the source of the power is purely contractual then judicial review will not generally be available.
• In some cases the Courts have held bodies without any statutory basis to be amenable to judicial review, because it is clear from the context in which they operate that if they did not exist that government would step in.
• A body is unlikely to be amenable to judicial review where the relationship between the body and its members is purely contractual, and it is a voluntary scheme which members are not required to sign up to.

Background

The Chartered Institute of Taxation ("the CIOT") is a membership organisation for tax professionals, with over 19,000 members. A tax adviser is not required to be a member of a professional body such as the CIOT, and each member enters into a membership contract under which he or she is obliged to comply with the CIOT's Bye-laws, Members’ Regulations, Council Regulations and disciplinary rules and is also obliged to accept the jurisdiction of the Taxation Disciplinary Board (the "Board"). It has no general statutory powers.

The CIOT decided in February 2020 to refer a complaint against the claimant, Mr Hannah, to the Board. Mr Hannah sought to challenge the referral by way of judicial review, alleging that the decision was procedurally unfair as he was not able to make representations before the referral was made.

Decision

The Court considered whether the CIOT was amenable to judicial review, and summarised the current approach taken by the Courts with regard to amenability. Judicial review is not restricted to bodies which derive their powers from legislation or the prerogative. If the source of the power is legislation, the body in question generally will be subject to judicial review, but if the source of the power is purely contractual then judicial review will not generally be available. The Court will look at both the source and the nature of the power being exercised to see whether the body exercises public law functions, or whether their exercise had public law consequences (R v Panel on Take-Overs and Mergers ex parte Datafin plc [1987] QB 815). A body will generally be amenable to judicial review if its functions have been interwoven into the fabric of governmental regulation or governmental control, for instance if regulations take account of its decisions.

In some cases the Courts have held bodies to be amenable to judicial review without any statutory basis, because it is clear from the context in which they operate that if they did not exist that government would step in and its functions would be carried out by an existing authority exercising statutory powers (R v Advertising Standards Authority Limited ex parte Insurance Service plc (1990) 2 Admin LR 77).

The Court concluded that the referral function of the CIOT was not amenable to judicial review. It noted that there was no statutory scheme regulating the conduct of tax advisers, that the CIOT scheme was operated voluntarily and its relationship with its members is purely contractual. The CIOT itself is not involved in disciplining its members.

The Court noted that it is in the interests not only of clients and the public, but also of the collective membership of the CIOT, that there is a code of conduct and a disciplinary system to maintain professional standards and reputation i.e. it is advantageous for an agent to be able to promote him or herself as someone with the professional standing and reputation of a Chartered Tax Adviser. The Court found that these features were compatible with the position of a member being the subject of purely private law principles. The Court noted that this conclusion was reinforced by the fact that there is no requirement for any person or body giving tax advice to belong to the CIOT or any other professional body, and the Government had not indicated any inclination to introduce such a requirement. The Court also noted that the Board may receive complaints about members of the CIOT directly from a member of the public, and that there could be no question of such a referral being amenable to judicial review.

Even if the referral to the Board was amenable to judicial review, the Court commented that it would not have been appropriate to quash the decision on the grounds of procedural fairness, not least because the CIOT's referral was only a preliminary step and did not involve any adverse conclusion that the standards had been breached. It simply started a disciplinary process (the commencement of which would not be publicised) which would include multiple opportunities for Mr Hannah to make representations.

Comment

The judgment in this case reinforces the approach taken by the Court of Appeal in R (Holmcroft Properties Ltd) v KPMG LLP [2018] EWCA Civ 2093 regarding when a body is amenable to judicial review. The Court of Appeal in Holmcroft confirmed that the test is whether the body carries out a public law function, and the circumstances relating to the nature and function of the power are relevant. In Hannah, the fact that the CIOT's relationship with its members is purely contractual was indicative but not solely determinative of the applicability of public law principles to the CIOT's decision-making. The Court will focus on whether the body is carrying out a public law function by reviewing the broader regulatory and factual context.

The manner in which the Government interacts with the functions in question will also weigh with the Court, in particular whether the body is woven into the fabric of public regulation or whether, but for the body's existence, a Government organisation would 'step into the breach'.