APPENDIX


BRANDON PARISH COUNCIL

AUDIT OF ACCOUNTS
OBJECTION TO 1999/2000 ACCOUNTS
STATEMENT OF REASONS


Introduction

1.    I am the Auditor appointed to audit the accounts of Brandon Parish Council (“the Council”) for the financial year 1999/2000.

2.    In the exercise of the right conferred by section 16 of the Audit Commission Act 1998 (“the 1998 Act”), Mrs J A Ahern, Mr N A Vant and Mr A P Saxby (“the Objectors”), local government electors for the area of the Council, made objection to the 1999/2000 accounts of the Council.

The Objection

3.    The objection is set out and clarified in letters from the Objectors dated 11 July 2000, 12 August 2000 and 13 January 2001. The objection may be summarised as follows:

expenditure in respect of payments made by the Council in 1999/2000 to Brandon Remembrance Playing Fields Association (“the Association”), Brandon Bowling Club (which is in the ownership of the Association) and Brandon Chamber of Trade was unlawful and gives rise to items of account contrary to law, and represents a loss or deficiency in the Council’s accounts caused by the wilful misconduct of former Councillor Vincent (“Mrs Vincent”).

4.    The Objectors invite me to:

(a)    consider issuing a public interest report in respect of Councillor Vincent’s actions, under section 8 of the 1998 Act;

(b)    apply to the Court for a declaration that the expenditure in question is contrary to law, under section 17 of the 1998 Act;

(c)    issue a certificate of loss against Councillor Vincent for the amount of the expenditure in question on the grounds of her alleged wilful misconduct, under section 18 of the 1998 Act.




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5.    The expenditure in question amounts to £21,217.75 made up by the following payments:
                                                                                                 £
(a)    Payments to the Association

        (i)      £3,750.00

        (ii)     £5,019.81

        (iii)    £5,000.00

        (iv)    £6,230.19                                                       20,000.00

(b)    Payment to Brandon Bowling Club

(i)              £100.00                                                               100.00

(c)     Payments to Brandon Chamber of Trade

(i)             £1,117.75                                                           1,117.75

                                                      Total                           21,217.75


6.    In the process of considering this objection, I have received submissions from the Objectors and on behalf of the Council and Mrs Vincent. I have taken those submissions into account in reaching my decision on the Objection.

Statutory Provisions

7.    Section 8 of the 1998 provides that:

      “In auditing accounts required to be audited in accordance with this Act, the              auditor shall consider-

       (a)    whether, in the public interest, he should make a report on any matter              coming to his notice in the course of the audit, in order for it to be considered            by the body concerned or brought to the attention of the public, and

       (b)    whether the public interest requires any such matter to be made the                  subject of an immediate report rather than a report to be made at the                        conclusion of the audit.”

8.    By section 17 of the 1998 Act:


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“(1)     Where-

           (a)     it appears to the auditor carrying out an audit under this Act that an                          item of account is contrary to law; and

           (b)    the item is not sanctioned by the Secretary of State, the auditor may                           apply to the court for a declaration that the item is contrary to law.

(2)       On an application under this section the court may make or refuse to make               the declaration asked for, and if it makes the declaration then, subject to                   subsection (3), it may also -

            (a)    order that any person responsible for incurring or authorising                                     expenditure declared unlawful shall repay it in whole or in part to the                         body in question and, where there are two or more such persons,                               that they shall be jointly and severally liable to do so;

                    ...

(3)        The court shall not make an order under subsection (2)(a) or (b) if satisfied                that the person responsible for incurring or authorising the expenditure                      acted reasonably or in the belief that the expenditure was authorised by                    law, and in any other case shall have regard to all the circumstances,                        including that person’s means and ability to repay that expenditure or                        any part of it.”

9.    By section 18 of the 1998 Act:

             “(1)     Where it appears to the auditor carrying out an audit under this Act

                         (a) ...

                         (b)    that a loss has been incurred or deficiency caused by the wilful                                  misconduct of any person,

               the auditor shall certify that the sum, or the amount of the loss or                              deficiency, is due from that person.”

The section 17 objection

10.    The Objectors make no specific submissions in support of their invitation to me to apply to the court for a declaration that the expenditure in question is contrary to law, under section 17 of the 1998 Act.


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11.    At the relevant times, Mrs Vincent was a trustee of the Association in her own right, not as an appointee of the Council; she was Chairman of the Association’s Management Committee and she was also Chairman of Brandon Chamber of Trade.

12.    The Objectors allege that Mrs Vincent participated in discussions and voted when the decisions were taken by the Council to make the payments in question. It is the Objectors’ contention that the case of R -v- Secretary of State for the Environment ex parte Kirkstall Valley Campaign Ltd [1996] 3 All ER 304 indicates that the participation of Mrs Vincent in the decision making process which led to the agreement by the Council to make the payments in question “vitiates the decision of the Council, in which case the Council has spent money without proper authority.”

My consideration of the section 17 objection

13.    An item of account recording expenditure and income is “contrary to law” within the meaning of section 17 of the 1998 Act if, inter alia, it records expenditure or income which a local authority had no power to incur or receive or which was incurred without authority (Beecham -v- Metropolitan District Auditor (1976) 75 LGR 79) or was otherwise unlawful.

14.    In determining whether an item of account is “contrary to law”, neither the courts nor an auditor are entitled to substitute their own view of what may be a desirable policy for the view of a local authority. The courts may only intervene, on the application of an auditor or otherwise, if, in exercising a discretion conferred on it by Parliament, a local authority has acted unlawfully. A local authority may act unlawfully, for example, by acting for an improper purpose, by misdirecting itself in law, by failing to take into account a matter it was bound to take into account, by taking into account a factor it ought not to take into account or by reaching a conclusion that no local authority acting reasonably could reach (see Associated Picture Houses Ltd -v- Wednesbury Corporation [1948] 1 KB 223; Giddens -v- ­Harlow District Auditor (1972) 70 LGR 485).

15.    A person is disqualified from participation in a decision making process if there is a real possibility that he or she would be influenced by a pecuniary or personal interest in the outcome of the decision (see the Kirkstall Valley case and Porter -v- Magill [2002] 2 WLR 37).

16.    Any pecuniary or personal interest has to be declared and a member having such an interest is not entitled to participate in the decision making process unless that interest is too remote or insignificant to matter. In general, the participation in a decision making process of a single member with a disqualifying interest will vitiate the decision arrived at.


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17.    Ashton Graham, Solicitors acting on behalf of Mrs Vincent, make the general submission that, in relation to payments to the Association, Mrs Vincent’s vote “was immaterial” because the vote or proposal “would have been carried with or without her participation” . With regard to the payments to the Chamber of Trade, Ashton Graham confirm that Mrs Vincent “was the Chairman of the Chamber of Trade at the time the [Council] voted to make payments totalling £1,117. 75” and they state that Mrs Vincent “believes that she properly declared an interest where necessary”. Ashton Graham accept that Mrs Vincent “did not declare an interest when discussions and voting took place concerning the purchase of [a watering system]”. They say that the “vote taken would have been carried whether or not [Mrs Vincent] had voted for or against the proposals”. However, Ashton Graham record that Mrs Vincent has “accepted with hindsight that she had a non pecuniary interest...  and from May 2000 [she] did declare an interest when any issue was discussed in relation to the playing fields or the Chamber of Trade and did leave the room."

18.    The applicable legal principle is “that an individual with a personal, pecuniary or proprietary interest in the subject matter of [a] decision is disqualqied from participating in it” unless that interest is too remote or insignificant to matter, per Mr Justice Sedley in the Kirstall Valley case.

19.    In my view, and as Mrs Vincent now accepts, as a trustee of the Association and Chairman of the Chamber of Trade, Mrs Vincent had disqualifying interests in the subject matter of the decisions in question. In my view, Mrs Vincent participated in the decision making process while having a disqualifying interest.

20.    It follows, therefore, that the decisions impugned by the Objectors were, on the face of it, vitiated by the participation in the decision making process of a member with a disqualifying interest. Ashton Graham, however, submit that the impugned decisions would have been the same regardless of the participation of Mrs Vincent in the decision making process. I am not persuaded by that submission. Mrs Vincent was Chairman of the Association and of the Chamber of Trade and was Chairman and an influential member of the Council. I consider that her participation in the decision making process was sufficient to vitiate the impugned decisions.

21.    I, therefore, conclude that the expenditure in question, totalling £21,217.75, gives rise to items of account which are contrary to law within the meaning of that phrase in section 17 of the 1998 Act. Under section 17 of the 1998 Act, I have a discretion whether or not to apply to the Court. I must, therefore, consider how I should exercise that discretion but, before I do so, I turn to deal with the objection under section 18 of the 1998 Act.



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The section 18 objection

22.    The Objectors allege that the Council incurred a loss due to the wilful misconduct of Mrs Vincent. The grounds on which the Objectors rely in support of their allegation are that:

“(a)    Cllr. Vincent had participated in discussions and votes to make                       payments to both bodies when she had an interest in them. In the case of                   Brandon Remembrance Playing Fields Association, this was a non-pecuniary           interest. In the case of Brandon Chamber of Trade, it was an indirect                       financial interest in an organisation set up for the mutual benefit of its                     members.

(b)    Cllr. Vincent had knowingly acted wrongly in participating, since she               had been asked to declare the interest in Council meetings, but had refused to         do so.

(c)    Cllr. Vincent had knowingly acted wrongly in participating, when                     ignoring clear and unambiguous advice received from the Suffolk                             Association of Local Councils that she should declare an interest and                       withdraw from participation in the debate and decision making process.

(d)    Cllr. Vincent’s interests went beyond involvement in the bodies                         concerned, in that she was standing in the May 1999 district council elections           as an independent candidate for Brandon and Santon Downham. As such, her           actions amounted to exertion of undue influence on the Parish Council to                 obtain funding for the Brandon Remembrance Playing Fields Association,                 which would assist her election campaign. However, many of the events took           place after the May 1999 elections. Whilst that attempt at election to the                   District Council was unsuccessful there is every reason to believe that she                 would try again in the future. Further, she had expressed a wish to be a                   County Councillor. Her continuing actions to benefit the playing fields would           be relevant to those ambitions.”

23.    On behalf of Mrs Vincent, Ashton Graham invite me to have regard to what they describe as "fractiousness” within the Council, including verbal attacks by the Objectors on Mrs Vincent which Ashton Graham contend “created difficulties for all on the Council, not least to our client as Chairman”. Ashton Graham also make the following, among other, comments in relation to the Objectors’ contentions:

“Susan Vincent has stated her position, in a letter of 26 April 2000 and a                 written statement of 17 August 2000. She has accepted with hindsight that               she had a non pecuniary interest given her trustee status with the playing                 fields, and from May 2000 our client did declare an interest when any issue               was discussed in relation to the playing fields or the Chamber of Trade and               did leave the room.



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Susan Vincent denies she knowingly acted wrongly in taking part in the                     discussions prior to May 2000. On 26 April 2000 Susan Vincent wrote to the             clerk to the parish council. She set out her position and the reasons why she             had not previously declared an interest, and spoke and voted on matters                   concerning the playing field. She stated ‘I have no private or personal                       interest, in so far as that I do not personally benefit by being a trustee on the           management committee of a facility which is for the use of every inhabitant             of Brandon and an amenity which in other towns and villages is usually                     managed by the local authority’. The fact is it is a matter for each councillor           as to how they interpret the code of conduct. Our client did not ignore the                 code of conduct, she actively turned her mind to it, but considered at that                 time that as she did not have any personal benefit by being a trustee, that she           should not be precluded from speaking or voting on matters concerning the             playing field.

It is further alleged that Susan Vincent acted wrongly in ignoring advice from           the Suffolk Association of Local Councils [SALC]...

This was a question of interpretation by our client. She subsequently accepted           that she should declare an interest, but she did not knowingly wrongly                       participate in discussions. She genuinely believed she was entitled to vote,                 and it was her decision as to whether or not to declare an interest.

The final allegation... is that Susan Vincent’s actions amounted to ‘undue                 influence’ This final allegation is unparticularised, and has no substance to it           whatsoever. It suggests undue influence was exerted on the council, but does           not say how or when. The allegation is without merit, but it is important                   because it is effectively a further personal attack against our client, which is             entirely without merit, and which reflects the vexatious nature of the                         allegations made against Susan Vincent.”

24.    The Objectors take issue with a number of the comments made on behalf of Mrs Vincent. The Objectors contend that the National Code of Local Government Conduct “specifically differentiates between [Mrs Vincent’s] position as a Trustee and the position of one who merely benefits from a public facility”. The Objectors further contend that “there was an arguable benefit for Mrs Vincent in that, by furthering the interests of the [Association], and thus its member clubs, she could garner votes from that extended membership to further her political ambitions...

25.    In relation to the advice from SALC, the Objectors assert that Mrs Vincent had a copy of that advice which was clear and unambiguous.



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26.    The Objectors also say that “Whilst not strictly relevant, the 'fractiousness' to which Mrs Vincent refers, centres largely around her apparent manipulation of the [Council] to serve her ambition for higher office...”.

27.    In response to the further assertions by the Objectors, Ashton Graham state that:

“Our client stands by her previous statement. The suggestion that she was               seeking to ‘garner votes’ from the extended membership of the [Association]           'to further her political ambition' is untrue [and] completely                                      unsupportable...”.

28.    Ashton Graham also say that, in respect of the advice from SALC, Mrs Vincent considered “that it is for members of the Council themselves to make a decision on when they should declare an interest.” And they repeat the denial by Mrs Vincent of any wilful misconduct on her part.

My consideration of the section 18 objection

29.    Wilful misconduct means deliberately doing something which is wrong or wrongly omitting to do something, knowing it to be wrong or with reckless indifference as to whether it is wrong or not (Graham -v- Teesdale (1983) 81 LGR 117). This definition, was cited with approval in Lloyd & Others -v- McMahon [1987] 1 AC 625 and Porter -v- Magill [2002] 2 WLR 37. Misconduct occasioned by imprudence, negligence, excess of zeal, misplaced enthusiasm, error or lack ofjudgement falls short of wilful misconduct.

30.    I am mindful of the seriousness of a charge of wilful misconduct. I remind myself that although a section 18 enquiry is not a criminal proceeding, it should take a lot of evidence to tip the balance in favour of a positive finding of wilful misconduct because the accusation is serious and the consequences of such a finding are grave (see Lawton LJ in Lloyd -v- McMahon at page 647.)

31.    The Objectors contend that there was an, improper, ulterior motive for the failure by Mrs Vincent to declare an interest and for her participation in the decision making process leading to the payments in question being agreed by the Council. It is the Objectors’ case that the actions of Mrs Vincent “amounted to exertion of undue influence on the [Council] to obtain funding for the [Association] , which would assist her election campaign.”

32.    Further, the Objectors contend that clear and unambiguous advice was provided in relation to the National Code of Local Government Conduct which was in force at the relevant time.


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33.    It would take cogent evidence to establish that Mrs Vincent exerted “undue influence” to “assist [her] election campaign”. Far from providing any such evidence, the Objectors rely on their assertion that “However, many of the events took place after the May 1999 elections. Whilst the attempt at election to the District Council was unsuccessful there is every reason to believe that [Mrs Vincent] would try again in the future. Further she had expressed a wish to be a County Councillor. Her continuing actions to benefit the playing fields would be relevant to those ambitions”. This assertion by the Objectors is no more than speculation. It is not evidence and does not begin to satisfy the stringent test for establishing wilful misconduct.

34.    So far as the National Code of Local Government Conduct is concerned, that Code does lack clarity and may, in some respects, be inconsistent with the general law as explained in the Kirkstall Valley case.

35.    It is also the Objector’s contention that Mrs Vincent had been asked to declare relevant interests at Council meetings but had refused to do so. In order for me to uphold the objection, the Objectors must establish to the requisite standard of proof that Mrs Vincent did something which was wrong knowing it to be wrong or with reckless indifference as to whether it was wrong or not.

36.    I am satisfied that it was wrong of Mrs Vincent to have participated in the decision making process while having a disqualifying interest and I accept that the question of her failure to declare relevant interests had been raised with her at Council meetings. However, the evidence before me does not establish to the requisite standard of proof that, when Mrs Vincent participated in the decision making process while disqualified from doing so, she knew that it was wrong for her so to participate or that she was recklessly indifferent as to whether it was wrong or not. I am strengthened in this conclusion by the fact that when this issue was raised by one of the Objectors with the Clerk to the Council in March 2000, Mrs Vincent considered her position, apologised and, thereafter, declared an interest and did not participate when funding issues relating to the Association and/or the Chamber of Trade were discussed.

37.    For these reasons, I find Mrs Vincent not guilty of wilful misconduct. In my view, I have no duty to perform under section 18 of the 1998 Act.

Exercise of discretion under section 17 of the 1998 Act

38.    It appears to me that there are items of account in the Council’s accounts which are contrary to law. I therefore have to consider how to exercise the discretion conferred on me by section 17(1) of the 1998 Act and whether I should make an application to the Court for a declaration and consequential relief.


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39.    After careful consideration, I have decided not to make an application to the Court under section 17 of the 1998 Act for the following reasons:

         (1)    The case does not raise an important unresolved point of principle. Mrs                    Vincent has accepted that she should have declared a relevant interest and                        indicated that she would not participate in decisions in matters which she had a                  disqualifying interest. Mrs Vincent is no longer a member of the Council;

         (2)    The amounts involved are relatively small;

         (3)    I am satisfied that a Court would not make an order for repayment under                  section 17(2) of the 1998 Act. In my view, the members who voted to approve                the expenditure acted in the belief that the expenditure was authorised by law,                    including  in the case of Mrs Vincent who I have acquitted of any knowing or                    reckless  wrongdoing. It is, therefore, unlikely that a court would make an order                for  repayment having regard to the provisions of section 17(3) of the 1998 Act;

         (4)    The costs of an application to the High Court which would likely fall on local            taxpayers would far exceed the impugned expenditure. Substantial expenditure                  would therefore be incurred by the Council without any compensating benefit;

         (5)    The Council now has the benefit of the statement of the legal position as set              out in this statement of reasons. I have no reason to think that the circumstances                which are the subject of the objection will recur.

40.    I, therefore, decline to make an application to the High Court under section 17(1) of the 1998 Act. On that basis, I do not uphold the objection insofar as it invites me to take action under that section.

Public interest report

41.    The Objectors invite me to issue a report in the public interest under section 8 of the 1998 Act. I have decided not to do so.

42.    Having taken into account the matters set out in paragraph 39 above and the relevant provisions of the Code of Audit Practice, I am not persuaded that I should make such a report.

Conclusion

43.    I have given careful consideration to all of the evidence and submissions before me, whether or not specifically referred to in this statement of reasons.


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44.    It appears to me that there are items of account in the Council’s account which are contrary to law but, in the exercise of my discretion, I have decided not to apply to the Court under section 17 of the 1998 Act. I have, therefore, not upheld the objection insofar as it invites me to take action under section 17 of the 1998 Act.

45.    I have decided that I have no duty to perform under section 18 of the 1998 Act. I have, therefore, dismissed the objection insofar as it invites me to take action under that section of the 1998 Act.

46.    I have decided not to issue a report in the public interest under section 8 of the 1998 Act.

47.    This document constitutes my statement of reasons for my decisions.

48.    The Objectors have a right to appeal to the High Court against my decisions relating to sections 17 and 18 of the 1998 Act. The enclosed Form AF74 gives guidance as to the appeals procedure.



R Bennett

Appointed Auditor

31 July 2002





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