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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Great Yarmouth Port Company & Anor, R (On the Application Of) v Marine Management Organisation & Anor [2014] EWHC 833 (Admin) (24 March 2014) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2014/833.html Cite as: [2014] EWHC 833 (Admin)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		24/03/2014

Mr Justice Cranston:

Introduction

1. This judicial review is a challenge to a decision of the Marine Management Organisation ("the MMO") not to make a Harbour Revision Order in respect of the port of Great Yarmouth. The decision of the MMO was that it was not satisfied that the making of the order was desirable in the interests of the improvement, maintenance or management of the harbour in an efficient and economical manner. That is the test set out in section 14(2)(b) of the Harbours Act 1964 ("the 1964 Act"). The challenge turns on the proper interpretation of those words and also well known principles of judicial review. The claimants are the Great Yarmouth Port Company Limited ("the Company") and the Great Yarmouth Port Authority ("the Authority"). The defendant is the MMO since it exercises delegated power from the Minister under the Harbours Act 1964 (Delegation of Functions) Order 2010, SI 2010 No 674 ("the Delegation Order"). The interested party, Bourne Leisure (Hopton) Ltd ("Bourne Leisure"), operate a significant leisure complex on the coast south of Great Yarmouth.

Background

2. Great Yarmouth, situated at the mouth of the River Yare, has been an important trading port for centuries. Statutory powers were granted to the commissioners of the port as early as the late 1600s. The port's jurisdiction once extended a considerable distance into the Norfolk Broads. However, it now comprises the river port, with berths on both sides of the river and extending to just upstream of Haven Bridge, and the deep water Outer Harbour. Although in close proximity these have distinct entrances from the sea.
3. The privilege of taking dues and tolls at harbours where customable goods were landed was part of the Royal prerogative. The Crown granted rights to make harbours over a person's own land or the land of another: see Coulson & Forbes, The Law of Waters, 6^th ed, 1952, 83. To facilitate the making of private Acts for particular harbours, Parliament enacted the Harbours, Docks, and Piers Clauses Act 1847, which contained model clauses. The Great Yarmouth Port and Haven Act 1866 constituted commissioners for the conservation and improvement of the port and harbour. That Act was amended over the following century. The Great Yarmouth Outer Harbour Act 1986 ("the 1986 Act") conferred power on the commissioners to construct works and to acquire lands in relation, as the name suggests, to the outer harbour. Section 41 of the 1986 Act empowers the commissioners to let the outer harbour for a term not exceeding 99 years and transfer powers to the lessee (except the power to make by-laws). Under section 43 the commissioners can invest in and form companies, although those companies cannot be delegated any of the powers of the commissioners. The Authority is the successor body to the commissioners, with 11 members, chosen on a representative basis.
4. The Company is a private limited company incorporated in 2006 under the Companies Acts. It is a wholly owned subsidiary of another private limited Company, International Port Holdings Ltd ("IPL"), also incorporated in 2006 under the Companies Act. IPL is the vehicle of Global Infrastructure Partners ("GIP") for investment in ports and their management. The lead director for these companies in this case is Eliza O'Toole, who in her evidence explains that she is also President of Exolgan, which has a container terminal in Argentina, and that IPL and GIP manage, as a consortium, the Port of Brisbane.
5. In 2007 the Authority granted the Company a 99 year lease of the port so that it is landlord for port tenants. The Authority appointed the Company to exercise its functions on an agency basis. The agreement is confidential. Since 2007 the Company has built a new Outer Harbour and invested more than $US 100 million in the business and port infrastructure. There was a 50 percent increase in port revenue 2007-2010. The Authority sets annual tariffs on the basis of recommendations by the Company. Although the Company is responsible for providing pilotage, the pilots themselves are employed by the Authority.
6. In 2010 the Company applied for the making of the Great Yarmouth Harbour Revision Order 2010 ("the Revision Order"), the subject matter of this judicial review. The objective was to establish the Company as the harbour authority in lieu of the Authority. Articles 3 and 4 of the draft order would have established the Company as the Harbour Authority and transferred the Authority's statutory functions to it. Reconstitution of the Authority was to be dealt with in Article 8 and Schedule 1. The reconstitution date as defined in Schedule 1 was to be the first day of the sixth month after the expiry of the month of the operative date, the operative date being when the order came into effect.
7. The proposal for the Revision Order was published in February 2010. There was significant delay as the Company attempted to accommodate the range of objections which followed. Some of the delay was also attributable to the MMO, which had only recently assumed delegated powers under the 2010 Delegation Order. At the hearing I expressed concern about the delay. Given that certain objections were not resolved, ultimately the MMO caused a public inquiry to be held pursuant to the Harbours Act 1964, Schedule 3, para 18(1)(b). The task was entrusted to Mr L Rodgers, an engineer ("the Inspector").

The Inquiry

8. The Inspector held a pre-inquiry meeting on 1 March 2013 and heard evidence and submissions on 9, 10 and 12 April 2013. There was a site visit on 11 April. There is no need to rehearse all the evidence and submissions received by the Inspector at the public inquiry. Of significance to this judicial review, however, is the claimants' case, the submissions of two of the objectors (the Great Yarmouth Port Users Association and Bourne Leisure) and the stance of the Department of Transport.
9. The claimants' case for the Revision Order was set out in Ms O'Toole's evidence to the Inquiry and in the submissions of Gregory Jones QC. Ms O'Toole explained the rationale of the Revision Order, that the current arrangements for the port were hindering its growth. The success of the port was dependent on the understanding and confidence of its customers. By transferring the statutory powers from the Authority to the Company there would be an entity readily understood within the industry. The Company's customers were confused by the existing structure, which was different from other ports. Much time and expense (including legal expense) were wasted because of the unorthodox arrangements. Potential customers could be put off. In the very heavily competitive environment the complexity of the existing structure was economically disadvantageous and a hindrance in enabling the smooth, economic and efficient consummation of commercial transactions. It resulted in the port becoming less attractive and more expensive when compared to other competing ports. The Revision Order would introduce normal commercial arrangements and put the Company in the same position as other major commercial ports in England, which are also statutory harbour authorities. In addition to transferring the undertaking and functions of Authority to Company, the Revision Order provided for the consequential rationalisation of Authority's Board. In doing so it brought the Authority into closer compliance with the government's guidance in Modernising Trust Ports.
10. The Great Yarmouth Port Users Association, representing some 20 of the main businesses operating in the port, appeared before the Inquiry. Their evidence was of a concern with the Company's operation of the port. As to the Company's case, they knew of no confusion whatsoever with regard to the port structure. The Company's website was plain and simple and without confusion, including berthing arrangements and tariffs. Since the Company had leased the port for 99 years what could be clearer. Consequently the Port Users Association believed that this could be easily explained to both existing and potential customers. Their case was that the Company's Revision Order was unique in as much as it have already been gifted the assets of the Authority and Great Yarmouth Borough Council, together with over £19 million of public money, without any direct financial return.
11. At the Inquiry Bourne Leisure was represented by John Howell QC. He submitted that Ms O'Toole's evidence had eschewed any attempt to show that the Revision Order was required. Nor had she made any attempt to show that the order, if made, would be desirable in the interests of facilitating the efficient and economic transport of goods by sea. What she appeared to contend was that the position at Great Yarmouth was anomalous. In her answer to the Inspector's questions, Ms O'Toole cited as an example of people's confusion about the existing arrangements the misunderstanding on the MMO's part about whether the Company or the Authority set the charges for the use of the harbour. The Inspector's response to this evidence was that it was not clear why the Company's customers would be interested in the Authority's powers but, assuming they were, there would be no confusion if the details were published. Any confusion which existed, submitted Mr Howell, resulted from the fact that the details were apparently in a confidential agency agreement. What could be truly commercially sensitive about what the Authority had authorised the Company to do (as opposed possibly to the commercial terms upon which it is to be done) was impossible to imagine. Any problem in that respect was entirely self-induced. But if any customer was really interested in what particular statutory powers the Company exercised, it would still have to investigate, even if the order were made and the Company became the harbour authority.
12. The Department of Transport's representations on the draft Revision Order which were before the Inquiry comprised a collection of correspondence. In one letter to the MMO in May 2010 the Department said that it did not favour one port model over another and that it did not wish to comment on whether the Revision Order represented the best solution for Great Yarmouth. In emails two years later the Department reiterated that stance and that it was for the MMO to decide the matter.
13. The Inspector's Report was dated 4 June 2013. His conclusions began with the MMO's powers to make the Revision Order and the Company's standing to bring the application. At paragraphs 213-224 of the Report, the Inspector dealt with the objects identified by schedule 2 of the 1964 Act. Despite the submissions of Bourne Leisure to the contrary he decided that, in seeking to establish the Company as the harbour authority in place of the Authority, the Revision Order would fall in that respect within paragraph 1 of schedule 2: para 217. The Inspector then considered the reconstitution of the Authority and concluded that that would clearly fall within paragraph 1, were it to be the harbour authority. However, the Inspector noted that the Company would become the harbour authority so that the Authority would not, at the reconstitution date as defined in schedule 1, be the harbour authority. "In consequence its reconstitution would not fall within paragraph 1": para 218. The Inspector considered whether, nonetheless, even if the reconstitution did not fall within paragraph 1, it was covered by paragraph 17 of schedule 2 of the 1964 Act. The Inspector reasoned as follows:

"219…To my mind, in order for it to fall within Paragraph 17 it needs to satisfy two criteria: first, it needs to be an object the achievement of which will conduce to the efficient functioning of the harbour and, second; it can be regarded as a 'sweeping-up' provision.

220. With respect to the first criterion, even if the Order was made [the Authority] would continue to be the reversionary leaseholder for the Port and would continue to employ pilots and be party to a Pilotage Agreement with [the Company] (at least in the short term). In these circumstances it could be argued that if [the Authority's] reconstitution were to make it more efficient in performing these roles, then the harbour itself would function more efficiently.

221. It could also be argued that, as [the Company] would be the sole source of funding to [the Authority] (the funding arrangements were not put before the inquiry but I note that [the Authority] state that '... the confidential commercial arrangement contracted between [the Authority] and [the Company] are (sic) adequate for our needs and inure for the period of the leases….'), then any improvements in the efficiency of the residual [the Authority] would also lead to improvements in the efficiency of [the Company] . As [the Company] would be the [harbour authority], it could then be argued that this could also make the harbour function more efficiently.

222. However, whilst the reconstitution of the [the Authority] may, in theory at least, lead to some improvement in the efficiency of the harbour I see the linkages as being somewhat tenuous and nothing before the inquiry led me to believe that the potential efficiency improvements would in any way be significant."

Thus the Inspector concluded that overall the Revision Order could be regarded as falling under the provisions of schedule 2 of the 1964 Act but, given the tenuous nature of some of the arguments, it was a matter on which the MMO might wish to take a view: para 224.

14. After referring to the guidance "Modernising Trust Ports", the Inspector identified what he saw as the key issues arising from the Inquiry. The first was whether the Company could be seen as a fit and proper body to be the harbour authority. On that the Inspector said that, despite accepting that the management and commercial capabilities of the company could be a material consideration in considering whether to make the Revision Order, he could see no cogent reason to believe that in this respect its making would have any significant impact on the improvement, maintenance or management of the port. The next issue was pilotage, but concerns there attracted little weight. Thirdly, there was the issue of third party claims, such as the potential claims by Bourne Leisure, but that issue in the Inspector's view was not strictly relevant to the test in section 14 (2)(b) of the 1964 Act. The Company's evidence to him was that it considered that any existing liability would be transferred by the Revision Order and would fall on it. He observed that it was not known whether that changed where the financial burden of any claim currently fell. However, he opined that if the Revision Order were made, and the Company became the harbour authority, it was likely, as a limited company, to be more vulnerable to insolvency than a statutory body such as the Authority, particularly if, as suggested by Bourne Leisure, any claims might be substantial. The Inspector said this:

"269. If [the Company] was to become insolvent when also the statutory [harbour authority] then it seems to me that the hiatus of any insolvency process (even if [the Company] could continue in its role as) [harbour authority] would be likely to impose a greater risk on the improvement, maintenance and management of the Port than is the case with the current arrangements. This must be a factor weighing against the making of the Order.

270. However, it is not certain that there would be any claims against [the Company] and even if there were, their size and merits are not known. In consequence, even if such claims did arise they may not prove critical to [the Company's] ability to run the Port - either commercially or as [harbour authority]. Indeed, it seems to me that in principle the situation would be little different to that faced by any commercial Company seeking to be made [harbour authority]. In that respect [the Company] points out that there was no substantive evidence before the inquiry to show that a Company's commercial and financial viability had ever previously been taken into account by either the [Secretary of State] or the MMO when considering whether or not to make it an [harbour authority]. [The Company] also pointed to at least one example of a private sector £100 'shell Company' being made [harbour authority]. Whilst I do not see these as good reasons to argue that the financial or commercial viability of a Company could never be relevant factors in deciding whether or not to make an [Order], the fact that a private sector Company may be exposed to greater commercial risk is clearly not an insurmountable barrier to it becoming an [harbour authority].

271. Against this background it is my view that whilst there could be a greater risk to the improvement, maintenance and management of the Port if the role of [harbour authority] was to be transferred to [the Company] that risk can be accorded only a little weight in the overall balance."

15. With respect to the fifth issue, whether the making of the Revision Order would circumvent normal statutory controls designed to protect the public interest, the Inspector decided that this was not really part of his remit given that the port assets had already been sold, and that the Company performed the Authority's functions.
16. Finally the Inspector came to the benefits of the Revision Order. Here he considered the Company's case, that the making of the Revision Order would improve the efficiency of the port and rationalise the Authority, thereby producing efficiencies, cost savings and an entity fit for purpose. At paragraph 280 the Inspector commented that the existing arrangements at the port were no doubt unusual in that the body carrying out most of the functions of the harbour authority was not in fact the harbour authority. The Company contended that this anomalous situation gave rise to confusion and added costs for its customers and others, and made it plainly desirable that the Revision Order be made for the efficient management of the port. Members of the public and the press appeared to misunderstand the purpose of the inquiry which, it was said, added force to the point. However, the Inspector thought that public and press misunderstanding was not unique and in his view merited little weight.
17. In paragraph 281 the Inspector addressed the Company's contention that the unique nature and complexity of the arrangements inevitably involved an unexpected expense for port customers, and that even where customers' concerns could be allayed, time and expense were wasted in trying to explain the unorthodox arrangements. That increased the cost of doing business and extended the timescales for concluding transactions. The Inspector's conclusion on the confusion issue was as follows:

"282. However, whilst I see this as being an area of potentially greater concern it is not clear how the proposed [Revision Order] would assist in this regard. [The Company] already performs most of the functions of the [harbour authority] under its agency agreement with [the Authority]. Whilst customers may, at other Ports, be used to entering into commercial agreements directly with the [harbour authority], as [Bourne Leisure] suggests there should be little confusion if [the Company] was to make clear its responsibilities under the agency agreement (as opposed to its commercial terms).

283. In any case, even if the [Revision Order] was made, [the Authority] would retain the reversionary leases and any customer entering into a long term relationship with the Port would still be likely to need legal advice. The inquiry was also told that even if [the Company] became the [harbour authority] the only additional functions falling to [the Company] would be the authorisation of pilots and the ability to set tariffs without the need for [the Authority's] approval. I see neither of these functions as being directly relevant to individual transactions with Port users and the fact that these functions would be carried out by [the Company] rather than [the Authority] seems unlikely to result in any significant simplification as far as customers are concerned. Even though the MMO itself is said to be confused about the arrangements at the Port and who sets the tariffs100, users are more likely to be interested in the tariffs themselves rather than the body approving them.

284. Notwithstanding [the Company's] view that the current management arrangements are slowing growth and hindering the swift execution of opportunities (as potential customers are said to be confused by the current arrangements and in consequence lack confidence in the Port), in reality little substantive evidence was put before the inquiry in support of these assertions. Indeed, [Bourne Leisure] points out that not one example was provided of a customer who had been confused and who had been put off using the Port. [The Great Yarmouth Port Users Group], in its role as a representative association of 20 of the main businesses operating in the Port, says it knows of no confusion whatsoever with regard to the Port structure."

18. The Inspector turned to the reconstitution of the Authority and his earlier observation, that it could lead to an improvement in the efficiency of the harbour and may well lead to lower costs. He concluded that "there is no guarantee that any savings would be reinvested in the Port and in any event they are likely, at best, to be marginal": para 285. The Inspector also considered the fact that no statutory or regulatory body had objected to the Revision Order and that indeed the Authority was the joint promoter. However, he did not regard the absence of objections as carrying any appreciable weight. While the Authority supported the transfer of powers it had otherwise put forward no substantive evidence in support of its position. The Inspector considered the view expressed by the Department of Transport in a 2009 email, referred to later in the judgment, but commented that he did not see it as confirming the Department of Transport's support for the Revision Order as whole: para 286.
19. In response to the Company's case that the making of the Revision Order would put the port on the same commercial footing as other ports in England, such that it would have a much better chance of securing customers and that the complexity of the existing management structure was unattractive and more expensive than with other competing ports, the Inspector concluded that while this had some intellectual attraction, "in reality very little cogent evidence had been put forward in support of [the Company's] assertions". Consequently, the claimed benefits of making the Revision Order carried only a limited weight.
20. The Inspector recommended that the Revision Order not be made.

The MMO's decision letter

21. The MMO's Decision Letter is dated 27 August 2013: it was not satisfied that the making of the Revision Order was desirable in the interests of procuring the improvement, maintenance or management of the Great Yarmouth Harbour in an efficient and economic manner: paras 2, 49.
22. After setting out the details of the context and the application process, including the Authority's support for the Company's case, the Decision Letter turned to the statutory provisions. It first considered section 14(1) of the 1964 Act, under the head "Objects for whose achievement HROs may be made". It said this:

"28. The MMO agrees with the conclusion of the Inspector that the making of the Order would achieve objects specified in schedule 2 to the Act for the reasons given at paragraphs 213-224. Specifically, the establishment of the [Company] applicant as harbour authority in place of the Authority would achieve the object provided in paragraph 1 and the reconstitution of the Authority post transfer falls within the object provided in paragraph 17 namely, any object which, although not formally within the forgoing paragraphs, would conduce to the efficient functioning of the harbour."

The Decision Letter referred to section 14(2) of the 1964 Act and noted that there was no substantial challenge to the Company's contention that it had sufficient interest to fall within the criteria set out in section 14(2)(a).

23. The Decision Letter gave attention to section 14(2)(b) of the 1964 Act under the heading "Desirability". In analysing this issue it tracked the key issues the Inspector had identified in his report. The first was whether the Company could be seen as a fit and proper body to be the harbour authority and whether that was relevant to the making of the Order. Referring to the analysis of the Inspector the Decision Letter concluded that that was not an issue to which it should attach weight either way: para 31. Secondly, there was pilotage, which the Decision Letter approached as being of neutral significance. Third was the issue raised in particular by Bourne Leisure, the effect of the Revision Order on existing or future claims of third parties. The Decision Letter agreed with the analysis of the Inspector, that whether or not any third party claim was prejudiced by its making was of no direct relevance to the test under section 14(2)(b). Because it was no part of the Company's claim that the Revision Order was "desirable" in terms of its effects on any existing or future claims by third parties, it followed that relevant questions of law would be of neutral significance at best to the question of desirability. Accordingly, the Decision Letter did not attach weight to the issue either way: para 36.
24. The fourth issue was the effect of the Order on the improvement, maintenance and management of the harbour in the event of any future claims. The Decision Letter noted the Inspector's observations on the issue at paragraphs 268-271 of his report. It agreed that there was an increased risk of insolvency associated with a private limited company as opposed to a statutory body such as the Authority. However, it noted that the evidence presented to the Inspector did not indicate that any future claims would necessarily be proved critical to the Company's ability to run the port, and therefore accepted the Inspector's recommendation "not to afford any weight to this point in the overall balance: para 38. The fifth issue, under the "desirability" head, was whether the making of the Revision Order would circumvent normal statutory controls designed to protect the public interest. After a relatively lengthy consideration of this issue, and by reference to the Inspector's consideration of it, the Decision Letter stated that it was not persuaded that any weight should be given to this matter either way: para 46.
25. The final issue falling under the head of desirability concerned the benefits of making the Order. Here again the Decision Letter agreed with the conclusions of the Inspector, for the reasons that he had set out in his report at paragraphs 279-287. In particular it agreed that "very little cogent evidence" had been put forward in support of the Company's case that the Revision Order would improve the port's competitive standing. Accordingly, the Decision Letter accepted the Inspector's recommendation that only limited weight should be given to the claimed benefits of making it: para 47.
26. The Decision Letter then drew together its conclusions. First, the MMO was satisfied that sections 14(1) and 14(2)(a) of the Act had been met: para. 48. Secondly, it noted the Inspector's finding in respect of the overall balance of the issues, in particular his view as to the lack of substantive evidence supporting the claimed benefits of the Revision Order and therefore considered

"that this is sufficient in itself to warrant the refusal of the application. The MMO is not satisfied that the applicant has demonstrated that the Order is 'desirable' in relation to any of the interests mentioned in s. 14(2)(b)": para 49.

27. The Decision Letter then noted the three "disbenefits" that weighed against the granting of the Order which the Inspector had identified, namely (1) the risk that significant liabilities may be incurred in respect of pilotage; (2) the risk to management of the harbour consequent on third party claims against the Company in its role as harbour authority; and (3) the effective circumvention of intended controls over the disposal of trust ports in the Ports Act 1991: para 50. The Decision Letter stated that matters 1 and 3 should be given neutral significance and that only little weight should be given to matter 2. In reality, however, read the Decision Letter, the question of the weight to be given to those countervailing considerations was academic given the judgment that the claimed benefits of the Revision Order had not been adequately substantiated to enable the minimum threshold of desirability in section 14(2)(b) to be met: para 51. Accordingly, the Decision Letter concluded that the making of the Revision Order was not desirable in relation to any of the interests mentioned in section 14(2)(b). Since that was a mandatory requirement the application was refused: para 52.
28. Accompanying the Decision Letter was a formal document, called a "Decision Approval Document". It summarised a range of matters concerning the application, the consultation, the representations received, the public inquiry, the policy and the statutory tests. It also noted:

"the draft decision documents have been reviewed by MMO legal and counsel".

29. This judicial review was lodged on 13 October 2013. Summary grounds of defence were dated 30 October 2013. In early January 2014 Haddon-Cave J noted that together with the grounds the claimants had lodged four lever arch files of evidence and authorities to support the case. He ordered a rolled-up hearing. That occupied a day and a half before me on 11 and 12 March 2014. Additional documentation and authorities were before me. In light of the full consideration given to the matter it seems sensible to regard the case as one where permission to apply for judicial review has been given.

Statutory and policy Framework

30. The Harbours Act 1964 ("the 1964 Act") incorporated many of the recommendations of the Report of the Committee of Inquiry into the Major Ports of Great Britain, 1962. It established a National Ports Council, charged with the overall development of British ports, which survived until privatisation of the ports in the 1980s. I noted earlier that before the 1964 Act harbours operated in the main as local undertakings, under private legislation, albeit that a variety of Acts had some relevance for them (e.g. Explosives Act 1875; Petroleum (Consolidation) Act 1928: see R Douglas, P Lane, M Peto, Douglas & Green on the Law of Harbour Coasts and Pilotage 5^th ed, London, 1997, 4-5. The importance of this legislative history is that there seems to be no precedent for the provision at the heart of this case, section 14 of the 1964 Act.
31. Section 14 of the 1964 Act provides, inter alia, as follows:

"14. Minister's powers on application of harbour authorities, or other, to make orders for securing harbour efficiency, etc.

(1) Subject to the provisions of this section and to the following provisions of this Act, there may, in relation to a harbour which is being improved, maintained or managed by a harbour authority in the exercise and performance of statutory powers and duties, be made by the appropriate Minister an order (in this Act referred to as a "harbour revision order") for achieving all or any of the objects specified in Schedule 2 to this Act.

(2) Subject to the next following section, a harbour revision order shall not be made in relation to a harbour by the appropriate Minister—

(a) except upon written application in that behalf made to him by the authority engaged in improving, maintaining or managing it or by a person appearing to him to have a substantial interest or body representative of persons appearing to him to have such an interest; and

(b) unless the appropriate Minister is satisfied that the making of the order is desirable in the interests of securing the improvement, maintenance or management of the harbour in an efficient and economical manner or of facilitating the efficient and economic transport of goods or passengers by sea or in the interests of the recreational use of sea-going ships.

(2B) Nothing in subsection (2)(b) of this section shall prevent the making of an order for facilitating—

(a) the closing of part of the harbour,

(b) a reduction in the facilities available in the harbour, or

(c) the disposal of property not required for the purposes of the harbour,

if the appropriate Minister is satisfied that the making of the order is desirable on grounds other than those specified in that subsection.

(3) A harbour revision order may include all such provisions as appear to the appropriate Minister to be requisite or expedient for rendering of full effect any other provision of the order and any supplementary, consequential or incidental] provisions appearing to him to be requisite or expedient for the purposes of, or in connection with, the order."

The reference to the interests of recreational use of sea-going ships in section 14(2)(b), and sub-section 2B, were added by the Transport and Works Act 1992.

32. Schedule 2 to the Act is entitled "Objects for Whose Achievement Harbour Revision Orders May be Made". It provides that:

"1. Reconstituting the harbour authority by whom the harbour is being improved, maintained or managed or altering their constitution, or establishing, as the harbour authority, in lieu of the existing one, an existing body designated in that behalf or a body constituted for the purpose.

…

15. Securing the welfare of the authority's officers and servants and empowering the authority to provide, or secure the provisions of, pensions, gratuities and other like benefits for or in respect of their officers and servants.

...

17. Any object which, though not falling within any of the foregoing paragraphs, appears to the appropriate Minister to be one the achievement of which will conduce to the efficient functioning of the harbour."

33. Modernising Trust Ports, 2^nd ed, 2009, contains government guidance on corporate governance and accountability for trust ports. It highlights the need for a general improvement in the openness and accountability with which trust ports conduct their business. The guidance suggests that, in line with good commercial practice, a trust port board should comprise between 8 and 12 members. Larger boards are unwieldy, their effectiveness tending to decline in proportion to the number of members. A move from representatives to independent membership removes the need for a large and potentially ineffective board structure.

Misdirection of law as to meaning of section 14(2)(b); irrationality

34. The claimants' grounds 1-3 focused on the correct meaning of the relevant legislation and its application in the context of this case. Their case was that if the preconditions in subsection (1) and (2)(a) of section 14 are satisfied, a Revision Order should generally follow. "May" in the opening wording of section 14(1) does not mean that the MMO has a wide-ranging discretion as to whether or not an order should be made. It simply means that the MMO has the power to make it. The section does not confer a residual discretion to refuse to make an order where the conditions are satisfied. Julius v Oxford (Bishop) 49 LJQB 580; 5 App Cass 214 was cited in support of the proposition that, where a power has been deposited with a public authority for the purpose of being used for the benefit of persons (1) who are specifically pointed out, and (2) with regard to whom a definition is supplied by the legislature of the conditions upon which they are entitled to call for its exercise, that power ought to be exercised, and the court will require it to be exercised: see also M v Scottish Ministers [2012] UKSC 58; [2012] 1 WLR 3386, [42]-[48], per Lord Reed. If contrary to the claimants' principal submission the MMO retains a residual discretion not to confirm the order, the MMO may only do so if there is good reason. Such a residual discretion can only be exercised after considering whether subsection (2) is satisfied.
35. Secondly, the claimants submitted that the concept of desirability in section 14(2)(b) is a limited concept. It means in essence whether a proposed order is capable of achieving or is worth having for the interests of securing the improvement, maintenance or management of a harbour in an efficient and economical manner. The intention of Parliament, the claimants submitted, was that where a proposed Revision Order would achieve the objects set out in paragraphs 1 and 17 of schedule 2, it was clearly necessary for securing the improvement, maintenance or management of the harbour in an efficient and economical manner as required by section 14(2)(b) and the order should be made. Admittedly that would not follow with some of the other objects in schedule 2, such as paragraph 15: a Revision Order addressed to the pension arrangements of board members would not automatically be in the interests of securing the improvements, maintenance or management of a harbour in an efficient and economical manner.
36. The claimants' case continued that "desirable" does not confer a wide-ranging discretion to balance potential benefits and disbenefits of a Revision Order. Such an interpretation was plainly wrong not least because, if that were the case, the 1964 Act would likely have specified those matters which should be taken into account in exercising the discretion, or would specify some limits on its scope. No wider-ranging inquiry of potentially relevant factors is necessitated by subsection (2)(b) for the simple reason that the words employed by Parliament are limiting - "desirable in the interests of securing the improvement, maintenance or management of the harbour …" Consideration of whether a Revision Order is desirable is limited to those interests specified in subsection (2)(b), and whether the proposed Order is capable of achieving them.
37. As to the irrationality challenge in this regard, the claimants' case focussed on paragraph 28 of the Decision Letter and what was said to be the unchallenged evidence of the claimants at the Inquiry. There the Inspector had found that the making of the Revision Order would achieve objects specified in schedule 2, specifically that the establishment of the Company as a harbour authority in place of the Authority would achieve the object provided in paragraph 1, and that the reconstitution of the Authority and its overblown board fell within the object in para 17. There was the claimants' evidence at the Inquiry given by Ms O'Toole. The only conclusion which could lawfully and rationally follow was that the proposed Revision Order was "desirable" in the interests of securing the improvement, maintenance or management of the harbour. It was irrational to require more than that, that there had to be a minimum level of desirability. There was no finding by the Inspector or the MMO that the Revision Order was not capable of achieving the objects in schedule 2. What Parliament intended was that a proposed Order which would achieve those objects was desirable in the interests of securing the improvement, maintenance or management of the harbour.
38. Even if it was then open to the MMO to weigh other factors against its finding that the Revision Order would achieve the objects specified in Schedule 2, the claimants emphasised that the MMO had not done that. Of the three matters which could weigh against the making of the Revision Order, the Decision Letter concluded that only the second carried weight, and that was little weight. If it had been legitimate to weigh that factor against the desirability of making the Revision Order the only rational conclusion would have been that it should be made since the balance was in favour of it. It was irrational when the balance was in favour of the order not to regard it as desirable. The MMO has constructed a legal obstacle course and was being capricious.
39. In my view there is nothing difficult in the construction of section 14 of the 1964 Act. Section 14(1) confers a power on the Minister (because of the 2010 Delegation Order, the MMO) to make a harbour revision order. The statutory language is that the MMO "may" make an order, and in the ordinary way that means that the MMO has a discretionary power, not a duty. That discretion, as we see shortly, can only be exercised if certain pre-conditions are met, but if they are there is nothing I can see in the language or design of the statute to suggest that the MMO is confined in the course it can take. It is not just a matter of deciding whether or not an object in schedule 2 is capable of being met, and whether the making of an order is desirable in the interests specified in s. 14(2)(b). The statute confers on the MMO a residual discretion, and one it must exercise in the public interest. The most obvious case is that something may fall within a schedule 2 object and be desirable in one of the interests set out in section 14 (2)(b) but not be in the public interest because it is undesirable in terms of one of the other interests set out in that subsection.
40. It almost goes without saying that the residual discretion in section 14(1) must be exercised subject to ordinary public law principles: for example, it must be exercised rationally (to use that language) and taking into account relevant considerations and ignoring irrelevant ones. But otherwise the MMO has a discretion and can exercise it. In Julius v Oxford (Bishop) 49 LJQB 580, 5 App 214, Lord Cairns LC said that there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, or something in the title of the person or persons for whose benefit the power is to be exercised, which may couple a power with a duty: at 222-223. But that has no purchase in this context. The statute here confers a discretionary power. If in section 14 of the 1964 Act Parliament had intended otherwise is could have made that plain, most straightforwardly by use of mandatory language ("must" or "shall" make the order, not "may") but in other ways as well. Parliament did not do that.
41. Next, section 14(1) requires that the order must be for achieving all or any of the objects specified in schedule 2. If the MMO concludes that the order is not of that character no order may be made. Likewise, it is a bar on making an order if the pre-conditions in section 14(2) are not met, namely, the requirement for a written application for an order by a person specified (s. 14(2)(a)), and the MMO being satisfied that the making of the order "is desirable in the interests of securing the improvement, maintenance or management of the harbour in an efficient and economical manner": s. 14(2)(b). The first pre-condition is straightforward. So in my judgment is the second.
42. The first point is that desirability in section 14(2)(b) is not confined to whether a harbour revision order would achieve any of objects in schedule 2. The example of pension arrangements for harbour authority members, the object of paragraph 15 of the schedule, puts paid to that suggestion, given that excessively generous pension arrangements for board members could be directly contrary to those interests and be patently undesirable. But even if an application could be said to be for achieving an object under paragraph 17, this will not necessarily get it home in terms of desirability. That is obvious on the language of paragraph 17 itself, since it is confined to objects which appear to conduce to the efficient functioning of the harbour. By contrast under section 14(2)(b) the MMO has to be satisfied that the order is desirable along a broader dimension than the efficient functioning of the harbour. Moreover with paragraph 17 the issue is whether the order is for achieving an object which appears to the MMO to be one the achievement of which will conduce to the efficient running of the harbour. I would underline "appears" and "the achievement of which".
43. With section 14(2)(b), however, the MMO must be satisfied that the order is desirable in the interests of securing the benefits set out there. In other words the MMO must reach a conclusion (it must be satisfied) about a current state of affairs (the making of the order "is" desirable). "Securing" connotes something more than simply having an object, something with a goal which is hoped to be achieved. It simply does not follow on the statutory language that an order appearing to meet an object the achievement of which will conduce to the efficient functioning of the harbour must necessarily be one which is desirable in the interests of securing the improvement, maintenance or management of the harbour in an efficient and economical manner.
44. Secondly, the statutory intention cannot have been that desirability means simply capable of being desired, might be desirable, or worth having at some point in the future. It does not follow that something capable of being the object of desire is desirable in fact. The mere fact of the making of an application, and falling within section 14(2)(a), indicates a desire for an order. Quite obviously that is not enough. Desirability in section 14(2)(b) is something more, a judgment about outcome. And it is a judgment to be made in light of the evidence. The statutory requirement is that the MMO be satisfied that the making of the order is desirable, on the evidence, in securing the interests spelt out there. A range of considerations will enter from the evidence into the calculus of desirability. These need to be weighed to reach a conclusion on desirability vis a vis securing the interests set out in section 14(2)(b).
45. In my view there was no arguable misdirection or error of law on the part of the MMO. Nor does the claimants' rationality challenge in this regard come anywhere near success. The MMO was not satisfied that the making of the Revision Order was desirable in the interests of securing the improvement, maintenance or management of Great Yarmouth harbour in an efficient and economical manner. It adopted much of the Inspector's analysis of the evidence. From what I have summarised above, it is evident that that analysis was careful and well reasoned. The Decision Letter itself went through the issues the Inspector had discussed, indicting the weight to be given to each (in some cases, no weight). In terms of the evidence, the MMO agreed with the Inspector that there was very little cogent evidence to substantiate the benefits which Ms O'Toole advanced, for example, whether the order would eliminate confusion among harbour users or potential customers, whether any costs savings on management would actually go in favour of the harbour, and so on. The reconstitution of the Authority – the only object falling within paragraph 17 – was an ancillary matter which had nothing to do with securing, the improvement, maintenance and the management of the harbour in an efficient and economical manner, coming as it would after the order came into force and harbour authority powers were transferred to the Company.
46. Thus the MMO reached the conclusion that the order did not surmount the desirability test in section 14(2)(b). The language of a minimum threshold of desirability, read in its context, was an expression of this conclusion. It was an evidenced based judgment. The MMO concluded that there was simply insufficient evidence to establish that the Revision Order was desirable. Given the statutory scheme, there was then a roadblock to the MMO making the order under section 14(2). The MMO quite rightly concluded that any balancing exercise was academic because no proper case had been made in the first place to support the claim that the order was desirable. There was nothing irrational in this regard in the Decision Letter. Making the order was definitely not the only rational course open to the MMO and it could certainly not be said that the order would inevitably result in operational and business improvements in the harbour. These grounds fail.

Failure to take account of relevant matters

47. Ground 4 of the claimants' grounds was that there were five matters which the MMO failed to take into account in its decision. First, it was submitted, the MMO ignored the fact that the second claimant, the Authority, supported the making of the Order. That argument is a complete puzzle to me. Quite apart from the Inspector's recognition of the Authority's alignment with the Company's case, the Decision Letter explicitly recorded early on that the Authority supported the Revision Order. In as much as there was nothing from the Authority other than one letter of support for the Company's case that was a legitimate point for comment. It played no role whatsoever in the decision.
48. The second relevant factor said to be ignored is the support of the Department of Transport for the Revision Order. That is plain wrong. At the hearing I expressed my concern that an email from the Department of Transport in 2009, when the Revision Order was being drafted, should be placed before me to support this contention. To anyone knowing anything about the case that email was limited to navigation and pilotage arrangements. At the hearing before the Inspector – the crucial point in time, not 2009 – the Department of Transport's submission made quite clear that it was neutral as to whether the Revision Order should be made. I have referred to the Department of Transport's submission earlier in the judgment and need say no more about it.
49. Thirdly, the claimants submitted that the MMO failed to take into account and give weight to the fact that the MMO had, in common with a number of other bodies and persons, confused the existing arrangements between the Company and the Authority. This was one of a number of reasons why the claimants were promoting the Revision Order. The claimants also complained about a lack of adequate reasoning in the Decision Letter in this regard.
50. But as we have seen this evidence about confusion was criticised by the Great Yarmouth Port Users Group and Bourne Leisure. The Inspector expressly referred to the fact that the MMO was said to be confused about the arrangements at the port and who sets the tariffs. He clearly addressed Ms O'Toole's view that it was the anomalous situation between Authority and Company which had given rise to confusion and added cost. At paragraph 284, quoted earlier in the judgment, the Inspector summed up the matter and his conclusions about the relative lack of support for the case about confusion. At paragraph 47 of the Decision Letter the MMO agreed specifically with the Inspector's summing up at paragraph 284 and concluded itself that very little cogent evidence had been put forward in support of the claimants' case. Thus the third point goes nowhere, either as a rationality or reasons challenge. I accept that this is a good example of the warning given by Sir Thomas Bingham MR in Clarke Homes Ltd v Secretary of State for the Environment and East Staffordshire District Council (1993) 66 P & CR 263, that the question with a complaint of inadequate reasoning is whether the decision letter leaves room for genuine as opposed to forensic doubt as to what he has decided and why. In this case the claimants' complaint is resolved by a straightforward down-to-earth reading of the Inspector's Report and the Decision Letter "without excessive legalism or exegetical sophistication".
51. Fourthly, it was said that the MMO's decision failed to take into account that the Revision Order would bring the Authority's board into line with good governance practice as set out in the Modernising Trust Ports guidance. But the Inspector recognised in para 297 that the Authority's reconstitution contemplated in the Revision Order would comply with that guidance. There was no obligation on him to give any reasons about this issue, which was really a sideshow to the main issue of whether the transfer of functions should take place. It is hornbook law that reasons need not refer to every material consideration: Bolton Metropolitan District Council and Others v Secretary of State for the Environment (1996) 71 P & CR 309; South Bucks District Council v Porter (No 2) [2004] 1 WLR 1953. In any event the Guidance would strictly speaking no longer apply to the Authority at the point of its reconstitution since that would occur when it was no longer a harbour authority following the transfer of functions to the Company six months previously.
52. Fifthly, the claimants contended that the MMO failed to have regard to previous similar decisions of the Secretary of State in respect of Harbour Revision Orders. These should have been taken into account because the principle of consistency demands that decision makers explain with cogent reasons why they are departing from previous practice. In some of those decisions the approach taken, the claimants submitted, was what they were advancing in this case. Moreover, there were numerous examples of private companies becoming statutory harbour authorities by means Harbour Revision Orders under the Harbours Act 1964. Particular reference was made to the Poole Harbour order. In closing the claimants presented me with yet more decisions on orders which were said to make the point.
53. There is no need for me to spend any great time on this submission. In its grounds and submissions the MMO carefully distinguished the Harbour Revision Orders to which the claimants had referred up to that point. For example, they pointed out that the Poole order is distinguishable from the current Revision Order because its objective was to consolidate and modernize management powers and did not involve the transfer of functions from one body to another. The key point is that without a careful examination of the background of each of these relatively brief decision letters there is no way of my knowing whether there is a similarity or not. This is not the situation in R (Rank) v East Cambridgeshire DC [2002] EWHC 2081 (Admin) or R (Harvard) v South Kesteven DC [206] EWHC 1373 (Admin), which related to planning applications made in respect of the same or neighbouring property, where the potential for inconsistent decision-making can be readily appreciated. The claimants are attempting to make out a case of inconsistent decision-making where the decisions on these orders relate to ports in different parts of the country, where a range of different considerations would have applied. And the fundamental point is that the MMO reached a decision based on the facts of this case and the evidence in support. None of those previous decisions meant that the only rational decision that could be made in this case was to make the Revision Order.

Fairness

54. The claimants' fifth and sixth grounds concerned the fairness of the procedure. Two specific objections were raised. The first is that MMO concluded that the Revision Order should not be made because it found that there was a minimum threshold of desirability to be met. That approach, the claimants submitted, is not set out in any guidance promulgated by MMO, it is not part of the statutory test and it was not canvassed in any way during the Inquiry. The claimants were deprived of an opportunity to present material about an approach on the part of the Inspector which they could not reasonably have anticipated. Moreover, the Inspector did not give any warning to Ms O'Toole that the evidence she adduced was not cogent. Nor was her veracity challenged in the course of the Inquiry. As a consequence the claimants were denied a "fair crack at the whip": Castleford Homes Ltd v Secretary of State for the Environment [2011] EWHC (Admin) 77, [52], per Ouseley J.
55. I regard this ground as hopeless. The MMO was simply applying what I regard as a correct interpretation of section 14 of the 1964 Act and expressing that in lay terms. The claimants had every opportunity, which they took, to advance their interpretation of section 14 and how they said the prerequisites to the making of the Revision Order were met. In any event it is clear from the Inspector's report that in its submissions on the meaning of desirability the Company's submissions referred to the "threshold" set by the test and contended that it was relatively low: paras 145, 226. Regarding the Inspector's conclusion on the cogency of the evidence, I note that in Castleford Homes Ltd Ouseley J said that there is no general requirement for an inspector to reveal any provisional thinking. As to Ms O'Toole's evidence, truthfulness was not the issue. The fact is that, as explained earlier in the judgment, Ms O'Toole's assertions were challenged, for example in cross-examination by Mr Howell QC. The Inspector and the MMO came to a clear conclusion about the case she advanced for the claimants and explained why they had done so.
56. The second objection concerns the legal advice which the MMO took before issuing the Decision Letter, and which is mentioned in the Decision Approval Document. The claimants contended that they have never seen that advice and it may well have been in respect of the interpretation of section 14(2)(b). It was procedurally and substantively unfair for the MMO to take account of legal advice from an unspecified source when the claimants had no knowledge of it and when they had no opportunity to consider it and make representations.
57. As well as by reference to the principle of common law fairness, two Strasbourg cases under Article 6 were cited to advance this point. In Ruiz-Mateos v Spain (1993) 16 EHRR 5050 the State Counsel had been able to submit to the Constitutional Court observations on the lawfulness of the relevant legislation, whereas the claimant family lacked standing to do so. The court held that this was in breach of the fundamental right of an adversarial trial and the principle of equality of arms. Van Orshoven v Belgium (1998) 26 EHRR 55 involved the Belgium Advocate General making submissions at a disciplinary hearing of a doctor, and the doctor's representative being unable to respond. The court held that that was a violation of article 6.
58. In my view this ground is not even arguable. The claimants overlook both legal professional privilege and how the machinery of government functions. Of course as a general principle fairness requires that parties see the documents and advice which decision-making bodies utilise: e.g. R (Primary Health Investment Properties Ltd and others) v Secretary of State for Health [2009] EWHC 519 (Admin), [2009] PTSR 1563, [120], per McCombe J. But that does not apply to internal legal advice to Ministers. In Bushell v Secretary of State for the Environment [1981] AC 75, the House of Lords held that the Secretary of State was not required to communicate to the objectors departmental advice that he had received after the close of a public inquiry so as to give them an opportunity to comment on it. Lord Diplock said:

"… No one could reasonably suggest that as part of the decision-making process after receipt of the report the Minister ought not to consult with the officials of his department and obtain from them the best informed advice he can to enable him to form a balanced judgment on the strength of the objections and merits of the scheme in the interests of the public as a whole, or that he was bound to communicate the departmental advice that he received to the promoting authority and the objectors. … Once he has reached his decision he must be prepared to disclose his reasons for it, because the Tribunals and Inquiries. Act 1971 so requires; but he is, in my view, under no obligation to disclose to objectors and give them an opportunity of commenting on advice, expert or otherwise, which he receives from his Department in the course of making up his mind. If he thinks that to do so will be helpful to him in reaching the right decision in the public interest he may, of course, do so; but if he does not think it will be helpful—and this is for him to decide—failure to do so cannot in my view be treated as a denial of natural justice to the objectors": at 102.

59. The Strasbourg case law is of no assistance in this context. Both Ruiz-Mateos v Spain and Van Orshoven v Belgium concerned court or court-like proceedings, not legal advice obtained by an executive body before making a decision. There are very real dangers of seeking to apply case-law concerning judicial type decision-making to executive decisions. Nothing persuades me that Lord Diplock's approach in Bushell is not good law in relation to the legal advice the MMO received in this case in its preparation of the Decision Letter. It accords with how government works and has the virtue of ensuring that decisions are taken in compliance with law.

Conclusion

60. In the result I refuse this application for judicial review.