With regards to the policy of fining companies which miss their target punctuality levels, discretion of this kind must not be fettered. Policies of this kind which are introduced should not be strictly enforced; they must allow for exceptions, established in British Oxygen Co v Board of Trade [1971] AC 610. To make such rules would give delegated legislation too much discretion. If in this case the policy is flexible then there isn’t a problem, but if the policy is strictly enforced then it would be an abuse of discretion, which would make the rule unenforceable. In the case of Mills v London County Council [1925] 1 KB 213, there were similar facts to the case, and the court decided that as the final decision was down to the council, then the delegation should be allowed. It must also be considered whether the rules are going beyond the jurisdiction of the SRA. This was considered in R v Somerset CC ex parte Fewings [1995] 1 All ER 513. From the information given, it seems that the SRA has statutory powers to “monitor” the performance of the train operating companies (TOC’s), but it says nothing about implementing any policies to improve performance. If there is a power to do this in the statute then there will be no problems, but if there is not, then the policy could be quashed by the courts.
When approaching the question of legality with regards to the SRA and C2C, the grounds for review which C2C would use would be illegality through the abuse of discretion. C2C could argue that through releasing a press release concerning the renewal of the franchise, they had a legitimate expectation that if they met the conditions set out, they would be awarded the franchise. When an authority departs from an assurance given to someone, it is well-established that the courts may enforce the legitimate expectation, shown in the Liverpool Taxi case. However, in some situations, individual fairness can conflict with fairness in the public interest. In this case, one of the reasons given for giving the contract to Virgin Trains was because it offered better value for money for the public. This could be an overriding public interest, which could mean that SRA’s decision to give Virgin the franchise would be legitimate. This was shown in R v Secretary of State for Health ex parte US Tobacco [1992] 1 All ER 212. Although there was a case of legitimate expectation, the public interest was strong enough to justify it. C2C have also not suffered any detrimental reliance on this promise by the SRA, although if the courts expand the idea of detrimental reliance, there is the possibility that a moral reliance could be found, although how persuasive this would be is doubtful. However, the other reasons for not giving the franchise to C2C could be dubious. The Department of Transport’s guidance states that franchises aren’t to be awarded to a TOC without plans for integrating bus and rail transport. The SRA state that because C2C didn’t do this, they are not entitled to the franchise. However, the Department of Transport was only giving guidance which isn’t binding on the SRA, although in practise unless there is a major reason it is usually followed. This would most likely be upheld in court as a lawful reason to reject C2C, as the guidance is there for a reason. The final grounds which the SRA gives for not giving C2C the franchise is that the salaries of their directors are too excessive. C2C could argue that this was an irrelevant consideration, established in R v Secretary of State for the Home Department ex parte Venables (1998) AC 407. Whether or not C2C pays their directors a high wage is irrelevant in considering who should receive the franchise, as it does not effect who would be more suitable. This reason could be struck out by the courts as being unlawful if this is the case.
Therefore, it is more than likely that the advisory committee which the SRA set up is legitimate, as the final decision is down to the SRA – they are not bound to follow the decisions made by the committee. With regards to the policy of introducing fines, as long as it is flexible then the policy would be lawful, although if the rules are going beyond the jurisdiction of the SRA, then the policy would more than likely be found to be unlawful. Although C2C could be seen to have a legitimate expectation with regards to the press release, overriding public interest issues and the need to follow the government’s guidance may mean that Virgin Trains would still get the franchise, although it seems that there may have been irrelevant considerations, which could be grounds for judicial review.
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