Court Upholds Scottish Ministers' Policy on Reduced Grants for Multiple RHL Properties

Introduction

The case of Jon Sharp v. The Scottish Ministers ([2020] ScotCS CSOH_74) addressed the legality of Scottish Ministers’ grant policies concerning businesses in the Retail, Hospitality, and Leisure (RHL) sectors during the COVID-19 pandemic. Jon Sharp, the petitioner, challenged the Scottish Ministers' decision to reduce the grant amounts for businesses operating multiple properties, arguing that this policy violated his legitimate expectations and was irrational. The Scottish Court of Session, presided by Lord Fairley, delivered a comprehensive judgment on July 23, 2020, ultimately dismissing Sharp's claims and upholding the Ministers' policies.

Summary of the Judgment

The petitioner, Jon Sharp, operated six coffee shops in Edinburgh and received grants under the Scottish Ministers' RHL grant scheme. However, due to the policy restricting grants for second and subsequent properties by 25%, Sharp's total grant amounted to £107,500, whereas he contended that he was entitled to £135,000 if treated similarly to businesses in England. Sharp argued that the reduction violated his legitimate expectation and was irrational. The Court examined the foundations of legitimate expectation, the clarity of governmental promises, and the rationality of policy decisions. The Court concluded that Sharp did not establish a legitimate expectation for receiving full grants for all properties and that the Ministers' policy was rational and within their discretionary powers. Consequently, Sharp’s petition was dismissed.

Analysis

Precedents Cited

The judgment references several key precedents to assess the legitimacy and rationality of the Scottish Ministers' actions:

• R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009]: Established that legitimate expectations arise from clear, unambiguous, and unconditional promises by public authorities.
• R v Inland Revenue Commissioners, ex parte MFK Underwriting Agents Limited [1990]: Reinforced the criteria for legitimate expectations, emphasizing fairness and reliance.
• R (Save Britain’s Heritage) v Secretary of State for Communities and Local Government [2019]: Highlighted the necessity for clear assurances to establish legitimate expectations.
• Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 (Lord Diplock): Introduced the standard for assessing rationality in administrative decisions, known as Wednesbury unreasonableness.
• R (Bhatt Murphy) v The Independent Assessor [2008]: Discussed the concept of abuse of power in the context of legitimate expectation.

These precedents provided the framework for the Court to evaluate whether the Scottish Ministers' policy breached legal expectations and whether their decision-making met the standards of rationality and reasonableness.

Legal Reasoning

The Court's analysis was structured around two main legal arguments presented by the petitioner: legitimate expectation and rationality of the Ministers' policy.

Legitimate Expectation

To establish a legitimate expectation, the petitioner needed to demonstrate that the Scottish Ministers made a clear and unambiguous promise to provide full grants for all properties. The Court scrutinized the statements made by the Cabinet Secretaries on March 18, 2020, and found them to be insufficiently definitive. The use of terms like "up to £25,000" and the singular form to describe grants suggested potential variability. Moreover, subsequent clarifications on official websites indicated that grants were limited per property, undermining Sharp's claims. Consequently, the Court concluded that no legitimate expectation existed.

Rationality

Regarding rationality, the Court referred to the Wednesbury reasonableness standard, which assesses whether a decision is so unreasonable that no reasonable authority could have made it. The Scottish Ministers justified the 25% reduction on multiple properties by citing the Barnett formula and the unique economic landscape of Scotland, including a higher proportion of low-rateable properties. The Court found these reasons to be logical and within the Ministers' discretion, rejecting the notion that the policy was irrational or an abuse of power.

Impact

This judgment reinforces the principle that governmental policies, especially those involving discretionary financial support, are subject to judicial review but must be clearly justified. It emphasizes that legitimate expectations require explicit promises and that policy decisions must be assessable within the broader economic and legal context. Future cases involving grant schemes or governmental support mechanisms can look to this judgment to understand the boundaries of legitimate expectation and the standards for rationality in policy formulation.

Complex Concepts Simplified

Legitimate Expectation

Legitimate expectation refers to a legal principle where individuals or businesses have a reasonable expectation that a public authority will act in a certain way, based on the authority's past actions, statements, or policies. For such an expectation to be legally enforceable, it must be clear, unambiguous, and created by a public body, often requiring individuals to have relied upon it to their detriment.

Wednesbury Unreasonableness

This term originates from the landmark case Associated Provincial Picture Houses v Wednesbury Corporation [1948], establishing that a decision by a public authority can be overturned if it is so unreasonable that no reasonable authority would ever consider imposing it. It sets a high threshold for courts to interfere with administrative decisions, focusing on extreme irrationality.

Barnett Formula

The Barnett Formula is a mechanism used by the UK Treasury to adjust the amounts of public expenditure allocated to Scotland, Wales, and Northern Ireland, based on changes to spending in England. It aims to ensure that funding remains proportionate to the relative populations of the devolved nations.

Conclusion

The judgment in Jon Sharp v. The Scottish Ministers underscores the necessity for clear and unequivocal communication from public authorities to establish legitimate expectations. The Scottish Court of Session's decision highlights the judiciary's deference to the executive in policy-making within devolved matters, provided that such policies are rational and justifiable within their context. This case serves as a precedent for the limits of legitimate expectation claims and reinforces the standards for rationality in governmental decision-making processes.