. 131
( 155 .)


which concern the welfare of the State.

The broad rule of ˜executive necessity™ a¬rmed by Rowlatt J in this case has
caused disquiet. Denning J in Robertson v Minister of Pensions [1949] 1 KB 227
sought to limit its application, saying that the ˜defence of executive necessity™
would avail the Crown only ˜where there is an implied term to that e¬ect or that
is the true meaning of the contract™. Certainly the rule does not give the
government carte blanche to renounce its contracts. It is generally accepted “ as
by Rowlatt J himself in the above passage “ that it does not apply to ordinary
commercial contracts, such as are made by the government in great number.
The undertaking given by the Government in the Amphitrite case was of a very
unusual kind, and in the conditions of war a court would naturally have been
unwilling to restrict the government in making decisions that might be dictated
by unexpected emergencies. The rule is probably to be understood as meaning
that the Crown is not bound by a contractual undertaking which proves to be
incompatible with the necessary exercise of its powers in a matter of compelling
public interest. Even so limited, the rule is open to question. Is the Crown not
su¬ciently protected by its immunity from orders of speci¬c performance?
A rare instance of the application of the Amphitrite principle was Crown
Lands Commissioners v Page [1960] 2 QB 274, in which the Court of Appeal held
that a lease by the Crown must be treated as impliedly subject to the ˜proper
exercise in the future of the Crown™s executive authority™; therefore no covenant
of quiet enjoyment could be implied in favour of the tenant which would limit
the Crown™s future exercise of its discretionary powers.
707 The courts: judicial review and liability

In practice the government seldom needs to invoke the rule of executive
necessity, for a standard condition of government contracts, known as the
˜break clause™, which is generally included in government contracts of substan-
tial value, allows the government to terminate the contract at any time in its
discretion. The break clause is not open to the reproach of unfairness which
attends the rule of executive necessity, or at least not to the same extent, for the
clause includes provision for compensation of the contractor in respect of work
already done and for wasted expenditure.

(b) Tortious liability
Petition of right was not available in English law against the Crown for claims
in tort, this immunity being derived from the maxim ˜the King can do no
wrong™, which was understood as excluding not only the personal liability of
the Sovereign but the vicarious liability of the Crown for the torts of its
servants (on the extension of this immunity to Scotland, see Macgregor v Lord
Advocate 1921 SC 847). An action could be brought against a Crown servant
who had personally committed the tort and the Crown would then normally “
if the tort was committed in the course of employment “ undertake the
defence of the case and make an ex gratia payment of any damages awarded.
If it was not possible to identify a particular Crown servant who was respon-
sible for the tort, the Crown might cooperate by nominating an o¬cial against
whom the action might be brought, but this device became unworkable when
the courts refused to admit the personal liability of Crown servants who had
themselves committed no tort. (See Adams v Naylor [1946] AC 543; Royster
v Cavey [1947] KB 204.)
Parliament might have reformed the law by simply enacting in general terms
that the Crown should henceforth be liable in tort. This was not done. Instead,
section 2(1) of the Crown Proceedings Act 1947 provides that the Crown shall
be liable in tort to the same extent as if it were ˜a private person of full age and
capacity™, under three heads:

(a) in respect of torts committed by its servants or agents;
(b) in respect of any breach of those duties which a person owes to his servants or agents
at common law by reason of being their employer; and
(c) in respect of any breach of the duties attaching at common law to the ownership,
occupation, possession or control of property.

Section 2(2) adds one further ground, in providing that the Crown may be liable
for breach of statutory duty, provided that the duty ˜is binding also upon
persons other than the Crown and its o¬cers™.
Although these four categories cover almost the whole ground of tortious
liability, there are some few instances of liability which fall outside them, so that
a residue of Crown immunity appears to survive. This can be illustrated by
708 British Government and the Constitution

reference to Collins v Hertfordshire County Council [1947] KB 598, in which the
managers of a hospital were held liable for the death of a patient which occurred
because the hospital operated a negligent system for the provision of dangerous
drugs. The duty which rested on the hospital, to maintain a safe system, was not
one which would fall within any of the categories of liability in the Crown
Proceedings Act if the defendant in such a case should be the Crown. Doubtless
in some cases of this kind the Crown, while not itself in breach of any duty,
would be vicariously liable for the negligent act of a servant under section
2(1)(a), but it might not always be possible to establish that any particular
Crown servant had committed a tort.
Proceedings under any of the four heads may be brought only if the liability
arises in respect of Her Majesty™s Government in the United Kingdom; a
certi¬cate issued by a Secretary of State that any alleged liability does not so
arise is declared to be conclusive (s 40(2)(b), (3)). An action was defeated by
such a certi¬cate in Trawnik v Lennox [1985] 1 WLR 532, a case which arose
from actions of the British military authorities in Germany.
Section 2(l)(a), above, provides for the vicarious liability of the Crown for
torts of its ˜servants or agents™. Whether any person is to be considered
a servant of the Crown for the purpose of vicarious liability is a matter pri-
marily for the common law, but section 2(6) provides that the Crown is not to
be liable for the act of any ˜o¬cer™ of the Crown (de¬ned in section 38(2) as
including ˜any servant of His Majesty™ and, accordingly, a minister of the
Crown) unless the o¬cer was directly or indirectly appointed by the Crown
and paid wholly out of moneys provided by Parliament or certain other
central government funds. The main e¬ect of this provision is to exclude the
vicarious liability of the Crown for torts committed by the police (who are
paid in part out of local tax).
The question of the Crown™s vicarious liability will arise most often in
relation to the tort of negligence, making it necessary to decide whether the
Crown™s servant or agent owed a duty of care to the claimant. Such a duty may
be owed by o¬cers performing public functions, as in Home O¬ce v Dorset
Yacht Co Ltd [1970] AC 1004, and in principle a duty may attach to those giving
o¬cial information or advice (cf Hedley Byrne & Co v Heller & Partners [1964]
AC 465). But the question of the existence of a duty of care is decided by the
courts in the light of public policy, which will often be found to argue against
the imposition of liability for negligence in the exercise of public powers. In
particular, the courts show a marked reluctance to import a duty of care into
discretionary decision-making by ministers or o¬cials, and ˜the more that
general policy factors have to be taken into account in making the decision the
less suitable is the case for adjudication by the courts™ (per Browne-Wilkinson
V-C in Lonrho plc v Tebbit [1991] 4 All ER 973, 984). See further on these
matters, below.
(The domestic law on these matters may be contrasted with principles of state
liability under European Community law: see above, pp 312“15.)
709 The courts: judicial review and liability

(c) Liability in restitution
The leading case on the Crown™s liability in restitution is the Woolwich case.

Woolwich Equitable Building Society v Inland Revenue
Commissioners [1993] AC 70 (HL)
The Inland Revenue Commissioners (the Revenue) had claimed payment of
certain sums of money by way of tax from the building society (Woolwich).
Woolwich, while disputing its liability to the tax, had paid the sums claimed. In
proceedings for judicial review Woolwich then successfully challenged the
validity of the regulations on which the claims for tax had been based, so estab-
lishing that the claims had been unlawful. The Revenue thereupon repaid the
capital sums, but without interest.
Woolwich brought proceedings against the Revenue for interest on the sums
repaid. It was argued for the Revenue that no interest was payable, on the
ground that, even though Woolwich had not been liable to pay the tax, the
repayment of the capital was not legally due and had been made voluntarily. It
was admitted that if Woolwich had a valid claim for repayment of the capital on
the principles of restitution, interest would be recoverable. No immunity from
liability in restitution could be or was asserted by the Crown, and the House of
Lords was concerned with the application of the common law principles of
restitution to the circumstance of payment in response to an unlawful demand
of taxation from the Crown:

Lord Goff of Chieveley: . . . I now turn to the submission of Woolwich that your Lordships™
House should, despite the authorities to which I have referred, reformulate the law so as to
establish that the subject who makes a payment in response to an unlawful demand of tax
acquires forthwith a prima facie right in restitution to the repayment of the money. This is
the real point which lies at the heart of the present appeal . . .
The justice underlying Woolwich™s submission is, I consider, plain to see. Take the present
case. The revenue has made an unlawful demand for tax. The taxpayer is convinced that the
demand is unlawful, and has to decide what to do. It is faced with the revenue, armed with
the coercive power of the state, including what is in practice a power to charge interest which
is penal in its effect. In addition, being a reputable society which alone among building soci-
eties is challenging the lawfulness of the demand, it understandably fears damage to its
reputation if it does not pay. So it decides to pay first, asserting that it will challenge the
lawfulness of the demand in litigation. Now, Woolwich having won that litigation, the
revenue asserts that it was never under any obligation to repay the money, and that it in
fact repaid it only as a matter of grace. There being no applicable statute to regulate the
position, the revenue has to maintain this position at common law.
Stated in this stark form, the revenue™s position appears to me, as a matter of common
justice, to be unsustainable; and the injustice is rendered worse by the fact that it involves, as
710 British Government and the Constitution

Nolan J pointed out [1989] 1 WLR 137, 140, the revenue having the benefit of a massive
interest-free loan as the fruit of its unlawful action. I turn then from the particular to the
general. Take any tax or duty paid by the citizen pursuant to an unlawful demand. Common
justice seems to require that tax to be repaid, unless special circumstances or some principle
of policy require otherwise; prima facie, the taxpayer should be entitled to repayment
as of right.

Lord Go¬ went on to consider possible objections to ˜the simple call of justice™
and found them unpersuasive. On the contrary, he found a number of reasons
which reinforced the justice of Woolwich™s case and concluded:

I would therefore hold that money paid by a citizen to a public authority in the form of taxes
or other levies paid pursuant to an ultra vires demand by the authority is prima facie recove-
rable by the citizen as of right. As at present advised, I incline to the opinion that this principle
should extend to embrace cases in which the tax or other levy has been wrongly exacted by
the public authority not because the demand was ultra vires but for other reasons, for
example because the authority has misconstrued a relevant statute or regulation. It is not
however necessary to decide the point in the present case, and in any event cases of this
kind are generally the subject of statutory regimes which legislate for the circumstances in
which money so paid either must or may be repaid.

Lords Browne-Wilkinson and Slynn agreed that money paid to the Revenue
pursuant to an ultra vires demand was recoverable. Lords Keith and Jauncey
delivered dissenting speeches. In this case, as the Law Commission observed, the
House of Lords ˜overturned the traditional common law rule on overpaid levies,
which allowed recovery only on grounds recognised by the private law, and
substituted a new public law rule providing that such levies are prima facie
recoverable™ (Law Com No 227, Cm 2731/1994, para 1.8; see further Beatson
(1993) 109 LQR 401).

6 Liability of public authorities
Public authorities not enjoying the ˜shield of the Crown™ “ not being govern-
ment departments or Crown servants “ have never been immune from liability
in tort and may sue or be sued in ordinary civil proceedings.

(a) Contractual liability
In principle an incorporated public body has capacity to make contracts for any
purpose that falls within its competence as de¬ned by the relevant statute
(putting aside bodies incorporated under the prerogative). In the case of local
authorities, a general power to make contracts derives from section 111(1) of
the Local Government Act 1972, authorising an authority in England or Wales
711 The courts: judicial review and liability

to ˜do any thing . . . which is calculated to facilitate, or is conducive or inciden-
tal to, the discharge of any of their functions™. A like provision exists in respect
of local authorities in Scotland. Power to enter into ˜public-private partnership™
agreements (engaging private resources for local authority purposes) is given by
the Local Government (Contracts) Act 1997, and various other statutes confer
powers on local authorities to make speci¬c classes of contract. An authority is
not permitted to contract otherwise than for such authorised purposes: a
contract made for an ultra vires purpose is null and void, as was the loan
guarantee contract entered into by the local authority in Cr©dit Suisse v Allerdale
Borough Council [1997] QB 306. (In certain circumstances the other party to
such an ultra vires contract is protected by the provisions of the Local
Government (Contracts) Act 1997.)
Section 135 of the Local Government Act 1972 provides that a local author-
ity may make standing orders to regulate the making of contracts and must
make such orders with respect to contracts for the supply of goods or materials
or the execution of works. Standing orders relating to contracts for goods,
materials or works must provide for competition for such contracts and must
regulate the procedure for inviting tenders. Standing orders are internal rules to
be complied with by those acting for the authority, but section 135(4) provides
that a contractor shall not be bound to inquire whether standing orders have
been observed and that non-compliance ˜shall not invalidate any contract
entered into by or on behalf of the authority™.
The pursuit of collateral policies in local authority purchasing is restricted by
section 17 of the Local Government Act 1988, which speci¬es a number of ˜non-
commercial matters™ which must be excluded from the contracting process.
In their contracting procedures local authorities, like central government
bodies, are bound to observe the requirements of the European Community
Directives on procurement and the regulations implementing these in the
United Kingdom. The common law also imposes restrictions, for example in
the rule against fettering of discretion (Ayr Harbour Trustees v Oswald (1883)
8 App Cas 623; cf R v Lewisham London Borough Council, ex p Shell UK Ltd
[1988] 1 All ER 938).

(b) Tortious liability
The tortious (or, in Scotland, the delictual) liability of public authorities has in
recent years been the subject of several high-pro¬le appeals to the House of
Lords. This is a di¬cult and relatively fast-moving area of law, on which
European Community law and, even more so, European human rights law has
exerted considerable in¬‚uence. It is an area of law that has become contested
and controversial. The Law Commission is currently examining it: at the time
of writing its most recent report on this area was Remedies against Public Bodies:
a Scoping Report (October 2006). (The basic principles of this area of law
are broadly the same in English and in Scots law “ for a recent decision in
712 British Government and the Constitution

Scots law, applying many of the (English) House of Lords authorities consid-
ered below, see Mitchell v Glasgow City Council 2005 SLT 1100.)
The starting point in considering the tortious liability of public authorities
(other than the Crown) is double-edged: on the one hand, there is no general
cloak of immunity for public authorities, but on the other hand there is no
general right to damages for harm caused by an ultra vires act of a public
authority. The JUSTICE“All Souls report on Administrative Justice (1988)


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( 155 .)