Hughes, R (On the Application Of) v Kirklees Council

Factual and Procedural Background

On 11 February 2025, Company A acting by its Cabinet approved the sale of two specialist dementia care homes (referred to in the opinion as the Homes). These were Company A's only remaining care homes; most other homes in the area are privately owned, many registered to provide dementia care and some paid a premium for specialist provision. The Plaintiff is a resident of one of the Homes, in her early 90s with advanced dementia. Relatives of residents objected to the proposed sales, expressing concerns about staffing, continuity of care, quality, closure risk and wellbeing. The Homes were loss-making. Company A's decision was taken on financial grounds as part of a broader strategy to reallocate direct care delivery, and Company A would remain responsible for funding residents other than wholly self-funding residents (noted to be seven).

The Plaintiff sought permission for judicial review of the Decision; Judge Ward (sitting as a deputy High Court judge) refused permission on 9 December 2025. Permission to appeal was subsequently granted by Judge Lewison on 9 February 2026. The appeal was expedited because Company A had agreed terms for sale and the purchaser's longstop date (initially 17 March 2026) was extended to 17 June 2026.

Two grounds remained live on appeal: (1) that Company A acted irrationally by failing to explore an unformulated alternative proposal to continue running the Homes in-house despite acknowledging potential savings; and (2) that Company A irrationally based its comparison of costs on a per-unit weekly figure for independent provision that was two financial years out of date, thereby overstating projected savings by ~40%. The judge rejected ground (1) and accepted that reliance on the outdated figure was a logical error but refused relief under s.31(2A)/(3C) on the basis that the outcome would likely not have been substantially different. The respondent filed a respondent's notice arguing the judge was wrong to find irrationality in the first place.

Legal Issues Presented

1. Whether Company A acted irrationally by failing to investigate and quantify potential cost-saving measures that might have justified continuing to operate the Homes in public ownership.
2. Whether Company A acted irrationally by relying on an outdated per-unit weekly cost figure for alternative independent provision (two financial years old), thereby materially misleading the decision-maker about the scale of savings.

Arguments of the Parties

Plaintiff's Arguments

• The sale decision turned on projected savings; accurate comparison figures were therefore necessary.
• Company A breached its duty to take reasonable steps to inform itself (Tameside duty) by not modelling non-sale options for addressing overspend; it was irrational not to explore savings that could enable continued public operation.
• Using a January 2024 figure to compare against 2025/26 budget was irrational and misleading; the figure should have been increased (argued as 13.5% in submissions; judge found 10.7% appropriate).

Respondent's Arguments (Company A)

• The officer reports were intended to be read together; Company A reasonably decided not to keep updating the illustrative figure and explicitly informed members that some figures were based on earlier values.
• The judge was wrong to conclude reliance on the 2024 figure was irrational once the overall context and broader factors informing the Decision were considered.
• On the respondent's notice, Company A contended the judge should not have found irrationality in the first place regarding the outdated figure.

Table of Precedents Cited

Court's Reasoning and Analysis

The court emphasised the limited role of judicial review: it is not an appeal on the merits but a review for lawfulness, applying the two-part Law Society test for irrationality (range of reasonable decisions; flawed process including serious logical or methodological errors). There is a high threshold where decisions involve predictive financial judgments and resource allocation; courts should show deference to bodies with relevant operational experience.

The court examined the procedural history and the series of officer reports from September 2023 through February 2025, noting that the reports were to be read together and that members were taken to have knowledge of prior reports. Company A's strategy and the financial modelling were central to the Decision.

On ground 1 (failure to explore continuing public operation): the court treated this primarily as a Tameside duty challenge. Applying Tameside and related authorities, the judge had found Company A's inquiries reasonable and that officers were entitled to sift out matters not realistically viable before presenting to members. The appellate court agreed: the passing reference to "some savings" in the December 2024 report did not render it irrational for officers not to quantify or explore those savings further, given their operational knowledge, the limited likely impact of proposed measures (staffing changes limited to agency use and minimal impact from increasing fees for seven self-funders), and the absence of any credible basis identified for significant additional savings.

On ground 2/respondent's notice (use of outdated per-unit figure): the judge below found that the appropriate updated comparator for 2025-26 was 10.7% higher, producing a per-unit weekly figure of £943.93 and reducing annual budgeted savings from £867,295 to approximately £524,000; he concluded that adopting an outdated figure without addressing it constituted a logical error. The respondent argued the reliance was not irrational when viewed in context.

The appellate court accepted that officer reports did not present the £852.69 figure as up-to-date, that members were aware it dated from early 2024 and that the December 2024 report expressly warned that information was based on 2024/25 values and that 2025/26 values might vary. The court identified five reasons why continued reliance on the figure was not materially misleading: (1) reports did not purport the figure was current; (2) members were told values were outdated and might change; (3) members reasonably knew the figure could be out of date given inflationary pressures; (4) the Decision must be seen in the context of Company A's broader strategy to refocus resources where the private sector did not provide; and (5) even using an updated figure substantial annual savings remained (over £500,000) together with avoidance of overspend and capital costs. On that basis the court concluded the outdated figure was not materially misleading in context and that reliance on it was not irrational.

Because the court found no irrationality in reliance on the outdated figure when the full context is considered, it was unnecessary to consider further whether the judge below correctly applied the statutory s.31(2A) and (3C) test on the likelihood of a different outcome.

Holding and Implications

APPEAL DISMISSED

Holding: The court would dismiss the appeal and uphold Company A's Decision. The court found no public law irrationality in Company A's failure to quantify speculative internal savings and, having regard to the wider contextual material placed before the Cabinet, did not regard the continued use of the earlier per-unit comparator as materially misleading or irrational.

Implications: The direct effect is that the Decision approving the sale remains lawful and the judicial review challenge fails. The opinion applies existing principles on irrationality and the Tameside duty but does not purport to establish a novel principle of public law.