Neutral Citation Number: 2010 EWHC 2134 (Admin).

Case No: CO/10720/2009
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
ADMINISTRATIVE COURT AT LEEDS

The Court House
1 Oxford Row
Leeds LS1 3BG

Date:  12 August 2010 

Before :

HIS HONOUR JUDGE LANGAN QC
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Between :

	THE QUEEN on the application of GRIMSBY INSTITUTE OF FURTHER AND HIGHER EDUCATION	Claimant	
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	THE CHIEF EXECUTIVE OF SKILLS FUNDING
(formerly THE LEARNING AND SKILLS COUNCIL)	Defendant	

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Mr Peter Knox QC and Ms Ximena Montes-Manzano (instructed by Mr Rodger McCracken, the claimant’s in-house solicitor) for the claimant
Mr John Randall QC and Mr David Warner (instructed by Ms Cathy Robinson, solicitor, the defendant’s Head of Legal and Governance) for the defendant

Hearing dates: 16-18 June and 14-16 July 2010
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 JUDGMENT

JUDGE LANGAN: 
Introduction
1.	This case has to do with the concept of legitimate expectation in public law.
2.	At the material time the Learning and Skills Council (‘the LSC’) was responsible for securing the provision of further education (other than higher education) in England. The defendant is the statutory successor to the LSC, but it will be convenient to use the acronym LSC to refer indifferently to the defendant and the LSC itself.  As part of the carrying out of its functions, the LSC made grants to colleges in order to fund capital expenditure.
3.	The Grimsby Institute of Further and Higher Education (‘the Institute’) applied to the LSC for a grant towards the erection of a new building.  The system operated by the LSC for dealing with applications in respect of schemes which had, as the Institute’s project had, a capital value of more than £10 million involved two distinct stages.  These were known as Approval in Principle (‘AiP’) and Approval in Detail (‘AiD’).  The Institute obtained AiP for its application.  It failed thereafter to obtain AiD, not because of any lack of merit in the scheme presented, but because the LSC ran out of funds.  It transpired that the LSC had given AiP to so many applications, without regard to the fact that it had insufficient money to fund them all, that only a small number of the schemes could be given AiD.  The Institute was not one of that number.
4.	The Institute had spent a substantial amount of money in working up its application to the point at which it applied for AiD.  Some of this expenditure was reimbursed by the LSC: the greater part, a sum put by the Institute at £3,728,452, was not.  
5.	It is not part of the Institute’s case that it should have been granted AiD for its scheme.  The case advanced is that the Institute had a twofold legitimate expectation.  First, that once AiP had been granted, the application would be dealt with in accordance with the usual and known procedures of the LSC. Second, that the LSC would be funded and organised in a manner which enabled it to meet commitments given at AiP stage.  It is now clear that AiD will never be given to the Institute’s scheme.  The Institute seeks compensation for the non-fulfilment of the expectation in the form of reimbursement of the expenditure which it incurred.
6.	The answer of the LSC to this claim is, put very shortly, that the Institute falls a long way short of what is required to make good a public law case founded on legitimate expectation.
7.	This has been, as judicial review claims go, a heavy case.  There is a massive amount of documentary material before the court.  Witnesses were cross-examined on their statements.  The submissions of counsel, both written and oral, were lengthy.  The hearing lasted some six days.   It should be possible in this judgment, particularly in the light of the way in which the case was presented on behalf of the Institute in closing submissions, to deal more shortly with the facts than at one time I anticipated.  This will, however, be possible, only if I begin by rehearsing at some length, first, the statutory provisions relating to the LSC and its functions, and, secondly, the structure of the LSC and the procedures which it followed. The facts will then appear in what will, I hope, be a comprehensible statutory and administrative context.
8.	I am grateful to all the counsel engaged in the case for their considerable assistance.
The LSC: statutory provisions
9.	The LSC was established by section 1 of the Learning and Skills Act 2000 (‘the Act’) as a body of between 12 and 16 members, with functions expressly limited to England (a separate council for Wales was established by section 30 of the Act).
10.	The main duties of the LSC were set out in section 2(1) of the Act.  The LSC
   	must secure the provision of proper facilities for  –
(a) the provision of further education and training (other than higher education) suitable to the requirements of persons who are above compulsory school age but have not attained the age of 19,
			(b) training suitable to the requirements of such persons,
			(c) organised leisure-time occupation connected with such education, and
			(d) organised leisure-time occupation connected with such training.
11.	Section 3(1) of the Act provided that the LSC must secure the provision of reasonable facilities (which is a concept which differs from that of proper facilities) for the same descriptions of education, training and organised leisure-time for persons who have attained the age of 19.
12.	By section 5(1)(a) of the Act the LSC was empowered to secure the provision of financial resources to “persons providing or proposing to provide post-16 education or training.”  Section 6 of the Act empowered the LSC to impose conditions on the provision of financial resources.
13.	Section 19(1) of the Act required the LSC to “establish a committee (to be called a local learning and skills council) for each area of England specified by the Secretary of State.”  Each local council was to perform in relation to its area such of the duties of the LSC as the LSC specified, and might exercise in relation to its area such of the powers of the LSC as the LSC specified.
14.	Finally, section 27 dealt with grants to the LSC, and, so far as is material to this case, made these provisions.
(1)	The Secretary of State may make grants to the Council of such amounts and subject to such conditions as he thinks fit…
(2)	The conditions may set the Council’s budget for any of its financial years.
The LSC: structure and procedures
The structure of the LSC 
15.	At national level the LSC was headed by the Council itself.  Among the committees of the LSC there was a National Capital Committee, the function of which was to consider large-scale capital projects and make recommendations on them to the Council.
16.	Prior to 2008 the LSC had 9 Regional Boards and 47 Local Councils, to which regional and local functions were delegated.  The Local Councils were dissolved on 21 February 2008.  The Regional Boards were replaced by Regional Councils on 1 September 2008.  It was the role of a Regional Council, assisted by a Regional Capital Advisory Group, to identify, develop and recommend major capital projects.  The Institute lay within the LSC’s Yorkshire and Humber Region, which was itself divided into 4 areas. The Institute was within the Humber Area.
The financing of the LSC
17.	At the period with which I am concerned government expenditure was managed by way of triennial Comprehensive Spending Reviews.  Each year, in or around the month of December, the LSC received a grant letter from the Secretary of State.  This informed the LSC of the amount which it would receive from government for the year starting on the following 6 April.  At the start of a Comprehensive Spending Review period, the letter would provide a firm figure for the grant for the first year of the triennium and indicative figures for the second and third years.  One of the LSC’s witnesses, Mr Philip Head, said that, in accordance with this practice, in December 2004 the LSC had been given a firm figure for 2005-06 and indicative figures for 2006-07 and 2007-08.
Grant applications: the Capital Handbook
18.	The procedure for applying for grants was set out in the LSC’s Capital Handbook.  I have the second edition, which was published in November 2006.  I do not have the edition which was extant at the beginning of the story with which I am concerned.  That does not matter.  It is common ground that the Institute was aware from October 2006 of the imminent publication of the second edition, and also that the basic division of the application process into having to obtain AiP before seeking AiD was carried over from the first edition.
19.	As will appear later in this judgment, the contents of the Capital Handbook form an important plank in the Institute’s case and it is accordingly necessary to look at three parts of the Handbook in some detail.  First, there is some general, introductory material, through which I was taken when the case was opened.  Secondly, and relied upon in the closing submissions for the Institute, there are passages in the body of the Handbook which deal with applications for AiP and AiD and with project fee support.   Thirdly, and similarly relied upon in closing submissions, there is Annex A to the Handbook, which is entitled “Capital Projects Criteria.”
The Handbook: introductory material
20.	The Handbook begins by stating its purpose which is to update
the arrangements for the administration, assessment and determination of applications to the Learning and Skills Council (LSC) for consent and capital support.  It consolidates all general capital guidance provided by the LSC for further education (FE) sector providers (paragraph 1.1).
21.	The Handbook then proceeds, in a “Capital Overview”, to refer to the FE White Paper, Raising Skills, Improving Life Chances, “which sets out the Government’s expectation that the LSC’s capital resources will be directed to implement the FE component of the 14-19 vision in each locality.”
In this context, the LSC is seeking to both challenge and support the FE sector to develop world-class buildings for world-class teaching and learning… (paragraph 2.1)
Based on the additional capital funding for 2008-10 announced in the 2005 budget, if this level of funding continues and if most of it continues to be directed to the FE sector, the LSC estimates that the renewal and modernisation of the FE estate could be substantially completed by 2013-2014… (paragraph 2.2)
22.	There are then sections dealing with national and regional capital strategies (paragraph 3) and with provider property strategies (paragraph 4).  As regards the latter
The LSC expects all FE colleges to produce a college property strategy on a three-year basis.  In particular all colleges submitting a capital project application will need to have an agreed property strategy in place in order for the application to be approved…  (paragraph 4.4)
The Handbook: AiP, AiD, and fee support
23.	Applications for AiP and AiD are dealt with in paragraph 7 of the Handbook.
7.1  The LSC will continue to operate two levels of capital project approval for FE and 16-19 capital funding: approval in principle (AiP) and detailed approval.  Prior to preparing and submitting an application, all providers should consult with the LSC local partnership team, LSC regional provider financial management team and LSC RPA [regional property advisor] to discuss the key education, finance and property aspects of the project.
7.2  All colleges and other qualifying providers with proposals that have a total capital cost of more than £10 million will normally be required to make an AiP application.  Once the AiP application has been determined by the LSC, a detailed application will be worked up and submitted.  All proposals with estimated costs of more than £10 million will normally be considered by the LSC at these two stages.  All applications that have a total capital cost of less than £10 million will normally be considered once by the LSC as a detailed application.
7.3  The LSC will only accept applications when the college or other qualifying provider has reached a certain stage in the project design and preparation process.  In the case of AiP applications, the proposal must be developed approximately to the Royal Institute of British Architects (RIBA) design stage C.  In summary, the proposal should include the following:
	•  	A project brief
	•	Floor plans and proposed elevations
	•	An estimate of construction and other relevant costs
•	A clear indication of town planning issues including the identification of any onerous section 106 agreements.
	7.4 In the case of detailed applications, the proposal must be developed in the design stage to beyond RIBA stage D.  This means that the proposal should include the following:
		•	A fully completed project brief
•	A detailed proposal showing spatial arrangements, material and appearance, as well as a cost estimate
•	Evidence of full planning permission
•	A breakdown of tendered and other relevant costs.
7.5 All capital applications should use the appropriate forms, contained within Annex E… 
24.	Paragraph 8 of the Handbook deals with feasibility and project fee support.  Feasibility fee support is available towards the costs of preparing feasibility studies for projects with estimated capital costs of more than £5 million.  Costs are supported to a maximum of £200,000 on a matched funding basis: this means that the LSC will pay up to £100,000 so long as a similar sum is paid by the applicant.  The paragraph goes on to deal with project fee support.
AiP-project fee support
8.3 In addition to the feasibility fee support outlined above, the LSC has now introduced project fee support arrangements where colleges can apply to the LSC for grant support towards the fee costs associated with developing and preparing capital project applications, both to the AiP stage and then to the detailed stage, and on a basis suitable for LSC determination.  The purpose of these arrangements is to encourage colleges to bring forward more accurate and better founded applications by accessing grant funding for capital projects from the LSC at an earlier stage in the capital process, and to help reduce the financial burden on colleges of preparing capital projects.
8.4  In order to develop a project proposal to an AiP stage, colleges are likely to expend circa 15 per cent of the consultants’ total projected fees (usually up to 10 per cent of total project costs).  Colleges can apply for project fee support on a matched funding basis towards maximum costs of £500,000 to take an application up to the AiP stage.  This is not additional funding as such but is really an advance of support that would have been payable later with the aim of improving cash flow and incentivising better applications…
Detailed-project fee support
		8.5 In order to develop a detailed project application, colleges are likely to have 			expended circa 45 per cent of the consultants’ total projected fees.  Colleges that have 		approved AiP applications can apply for project fee support to enable them to develop 		the project to a stage where it can be considered as a detailed application.  The amount of 		project fee support is determined by the rate of the indicative level of grant support the 		LSC will have agreed for the AiP application.  The maximum allowable fee cost is up to 		£1 million.  For example, this means that if a college spends £600,000 on  fees between 		the AiP and detailed stage and the AiP was agreed at an indicative rate of 40 per cent, the 		college would be entitled to claim a grant of up to £240,000.  As with the AiP project fee 		support, this is not additional funding but an advance of support to ease college cash 			flow…
The Handbook: Capital Projects Criteria
25.	Annex A to the Handbook is divided into four sections: “Stage 1: Validation Criteria”; “Stage 2: Application to the Learning and Skills Council”; “Stage 3: Selection of Proposals by the Learning and Skills Council”; “Stage 4: Moderation Arrangements.”
26.	Stage 1: Validation Criteria.  Before applying to the LSC for support, a provider is expected to apply specified validation criteria to its own proposals (paragraphs 1-3).  It is also expected to be in a position to provide some of the funding of its project.
4  Given the scarcity of capital funds, a provider will be expected to contribute                     as much as it reasonably can to the costs of its projects.
5  The LSC’s maximum contribution towards the costs of a project will usually be no more than the sum the LSC considers necessary for the provider to be able to undertake the project.  A provider will need to demonstrate the need for a particular level of grant support in confirming the affordability of the project.
6  An appropriate figure should be provisionally agreed with the LSC’s regional PFM [provider finance manager] director before proposals are finalised.  Under the stage 3 criteria (see below), preference may be given to providers applying for less than the maximum available LSC support should there be competition for funds…
Providers are “required to demonstrate that they have diligently examined   whether better value for money might be obtained by private sector  investment” or through a public/private partnership (paragraph 9)
27.	Stage 2: Application to the LSC.  This section of Annex A lists the factors which applicants are advised to consider in developing a capital project.  They are: the delivery plan; quality issues; property indicators; the economic appraisal; borrowing criteria; financial heath criteria; and race relations issues.

28.	Stage 3: Selection of Proposals by the LSC.  This section begins with                paragraph 23:
The LSC will consider all proposals that pass the first two stages of the process against the seven selection criteria described at paragraphs 24-31.
           The selection criteria are: the contributions which the project would make to the provision of proper and reasonable facilities for FE and work-based training in the area; quality assessments of the existing provision; economy (on a cost per square metre comparison with similar constructions in the same area); value for money; efficient space utilisation; projects required to meet legal requirements, such as health and safety legislation (which will be given preference); and financing (preference is to be given to public-private financed projects and loan-financed projects, in that order).
29.	Stage 4: Moderation Arrangements.  This section starts with paragraph 32:
Local LSCs will determine the priority of competing capital applications according to the extent that they will contribute to meeting the LSC’s local and  national targets and objectives.  In the event of applications for capital grant exceeding the funds available, the LSC will put in place national moderation arrangements to determine the relative priority to be given to competing applications.
Narrative
30.	I now turn to the history of this case.
The background
31.	The Institute was founded in 1944.  Like other colleges in the FE sector, it was from its inception part of the educational provision made by the relevant local authority.  In April 1993, pursuant to the Higher and Further Education Act 1992, such colleges became independent corporate bodies, operating on a not-for-profit basis. Council land and buildings occupied by the colleges were taken over by the new corporations from the local authorities. In 2007-08 there were 366 FE colleges in England: there are somewhat fewer now, because of mergers.
32.	In 1993 much of the infrastructure of the colleges was in poor condition.  In the 2005 budget, the government announced “a step change in capital investment in the FE sector.”  Existing plans would enable government support for investment in the FE estate to rise to £250 million in 2007-08, while “Budget 2005 announces that an additional £350m of capital investment will be made over 2008-09 to 2009-10 to support the longer-term transformation of the further education sector.”
33.	By 2005 the Institute had around 20,000 students, the majority of whom were studying on part-time courses.  The main campus was at Nuns Corner in Grimsby.  As was the case with so many  FE colleges, the Institute’s buildings left a good deal to be desired, both in their general condition and as regards what is considered appropriate in a modern learning environment.  In discussions with local officers of the LSC, it was acknowledged by the LSC that the Institute had not over the years done particularly well in the allocation of capital grants from the LSC.  At the same time, it was made clear to the Institute that, in order to obtain large-scale funding, a college must come up with a detailed ‘masterplan’  –  that is, an estates strategy for a period of 5 years or so, which would demonstrate that any physical development would cohere with the college’s educational plans and vision.
From masterplan to AiP
34.	On 6 July 2005 the Institute applied to the LSC for feasibility fee support “to  employ consultants to undertake a 10 year masterplan/vision for estates rationalisation.”  Fee costs of the consultants were to come to £47,829 and support was requested at 50 per cent of this figure.  On 28 October 2005 the LSC approved the application.  The consultants engaged by the Institute for the purpose of preparing the masterplan were Dyers.
35.	By May 2006, North East Lincolnshire Council and Franklin Sixth Form College were on the scene, the former as the education authority which was responsible for Hereford School in Grimsby.  The idea which was being pursued was the comprehensive redevelopment of all three establishments on a single site so as to form a “learning village” or “learning corridor.”  There were various meetings at which representatives of the Institute, the local authority, the Sixth Form College and the LSC were present and exchanged ideas about the scheme.
36.	For the most part, it is not necessary for me to examine these meetings.  There were, however, three meetings in 2006 on which particular reliance was placed in submissions made on behalf of the Institute.  These took place on 18 August, 15 September and 13 October 2006.  As I intend to deal only with uncontroversial matters in this part of the judgment, I shall at this stage do no more than refer to the place of each meeting and the persons who were present.
37.	The meeting of 18 August 2006 took place at the Institute.  There were 14 persons present. Among them were: Professor Daniel Khan, who was then the Principal of the Institute; Mr Adrian Clarke, the Associate Principal (Strategic Services & Resourcing); Mr Michael Green FRICS, the regional property advisor for the Yorkshire and Humber Region of the LSC; and representatives of Franklin College, the local authority, and the Institute’s professional advisors.  Someone who was not at this meeting was Mr Ray Ellis, the Deputy Principal, who had the lead role within the project team at the Institute.
38.	On 22 August 2006 the Institute placed an advertisement in the Official Journal of the European Union regarding the obtaining of professional services for the project.
39.	The next important meeting took place on 15 September 2006 at the Institute.  There were 12 people (together with a thirteenth person recorded as being “in attendance”) at the meeting.  They included, from the Institute, Professor Khan and Mr Ellis; from the LSC, Mr Bob Flockton, who held the post of Partnership Director; representatives of Franklin College and the local authority, and professional advisors.
40.	Around this time Dyers produced their “Property Strategy and Ten Year Masterplan.”  As might be anticipated, this is a lengthy document.  It presented the Institute with four options, with Option 4 being recommended as the preferred option.  Option 1 was “Do nothing.”  Option 2 was “Do minimum”, that is, simply the outstanding planned maintenance.  Option 3, which was called “Combined new build HE and FE facility”, in fact comprised four sub-options, 3A, 3B, etc.  What these had in common  was that each included some elements of refurbishment and some elements of new building on the Nuns Corner site.  Option 4 was “Complete new build with contribution to HE and Learning Corridor objectives” and was just that: 46,680 square metres of purpose built accommodation, including provision of a nursery and a linked University Centre facility.
41.	By this stage, North East Lincolnshire Council and Hereford School appear to have left the stage, and they do not appear again in the story. 
42.	Following the production of the masterplan, there were further meetings involving representatives of the Institute and Franklin College and of the LSC.  Ms Jane Lyon, the Area Director for the Humber Area of the LSC, then wrote to Mr Philip Jenkinson, the chair of the governors of the Institute.  The letter is undated, but it must have been written after the masterplan had been seen by Ms Lyon and prior to the meeting of 26 September 2006 to which I will come shortly, because  the letter was referred to at that meeting.
43.	Ms Lyon set out the main elements of Dyers’ Option 4, noting that it embodied “a significant change to the original proposals but one which still supports the concept of a learning corridor.”  She continued:
After a further meeting with Peter [Newcome, the Principal of Franklin College] to share his views, the LSC felt it was important at this early stage to inform you of our support, in principle, and its further exploration.
As with any project of this magnitude, there will be many aspects to resolve.  However, the potential benefits for learners in North East Lincolnshire are seen as considerable.
From the LSC funding perspective, there is an opportunity for FE colleges to obtain substantial support that is unlikely to be available again for some considerable time.  Inevitably, both colleges will need to consider the financial implications but the LSC are hopeful that the Governing Bodies will recognise the benefits.
We do not want this to be a distraction from moving the overall scheme forward but we felt we need to determine, at an early stage, whether this radical plan is worthy of further investigation.  If it is, then we need to move speedily into the next stage and prepare a feasibility study as soon as possible.  
We appreciate this will require a degree of trust and mutual understanding requiring the best endeavours of both Corporations to make it happen.  If you need any further information from the LSC then do let us know, we are more than happy to give any presentations to the governing body if that is appropriate.
44.	On 26 September 2006 there was a meeting of the Corporation, or governing body, of the Institute.  Mr Ellis is recorded in the draft minutes (I have not seen an approved version) as saying that “the LSC have embedded themselves in the process.”  The minutes say that “[t]here was general support for the preferred option in terms of a joint campus with Franklin College.”  Then
The Corporation APPROVED the 10 year estates master plan and the submission of the detailed business case for the preferred option.
Lawrence Hart [of AA Projects, one of the professional advisors] advised that the next stage was to have discussions with the national LSC, so that the Institute could understand from an early state whether they supported the numbers.  He advised that the meeting should take place within 4-6 weeks.
45.	The third of the meetings as to which there is controversy was of a very   different kind from the other two.  It took place on 13 October 2006 at the Cedar Court Hotel in Bradford and was organised by the Yorkshire and the Humber Region of the LSC for an invited audience of college principals and chairs of governors or their representatives.  The agenda was headed “Building for the Future: Yorkshire and the Humber Regional Capital Strategy Event.”  The speakers included Mr Alastair Grindlay, the LSC’s Capital Programme Manager.  Mr Green was among the many LSC officers who were present. The Institute was represented by Mr Ellis and Mr Clarke.
46.	It is now possible to speed up the narrative somewhat.
47.	After the meeting of 13 October 2006, the Institute started the process of  selecting architects, main contractors, and the various professionals (quantity surveyors and environmental consultants) who would be required for the early stages of the project.
48.	On 3 November 2006 the Institute lodged with the LSC an application for fee support up to application in principle stage.  On the application form, the estimated project cost was shown as £113,134,340; the total fee cost up to AiP as £2 million; and the LSC contribution requested as £500,000.	
49.	Around the end of 2006 and the beginning of 2007 the Institute appointed Tribal Property Limited as project manager for the development.
50.	At some stage Franklin College decided to pursue its own application separately from that of the Institute.
51.	On 9 February 2007 the LSC informed the Institute that fee support of £250,000 had been approved.
52.	Formal appointments of professionals were then made.
53.	On 17 July 2007 the Institute submitted its application for AiP.  The original application was revised in October 2007 (the precise date is uncertain) and in the revised form, the project cost was shown as £118,699,000 before inflation and £133,656,525 after inflation.  The contribution requested from the LSC was £96,003,221 or 81 per cent of the pre-inflation cost.  This percentage is referred to as the “intervention rate.”  The balance was to be provided by a contribution from the Institute (£16,666,000) and other public sector grants (£6,000,000). 	
54.	There was then a process of discussion between the LSC’s regional finance officers and representatives of the Institute, and the application wound its way through the various stages required in order to obtain AiP.  The application was considered by the LSC’s Humber Capital Committee on 12 November 2007; by the Regional Capital Committee on 27 November 2007; and by the National Capital Committee on 13 December 2007.  At each stage the project was recommended for approval to the next tier in the hierarchy, but with an intervention rate of 80 per cent.
55.	The National Council of the LSC considered the application at a meeting on 23 January 2008.  There were 9 proposals in all before the meeting but, as the papers for the meeting had not been circulated in sufficient time for consideration by the members, no firm decisions were reached.  Instead, the chair and chief executive were given delegated authority to determine the applications, subject to comments which they might receive from members.
56.	Thereafter, the decision made was to grant AiP to the Institute’s application, but at a slightly lower intervention rate of 79 per cent.  The news was communicated in a letter of 31 January 2008 from Mr Philip Head, Director of Infrastructure and Property Services, to Professor Khan.  I should set out two paragraphs in full:
4 I confirm that in order to assist in marketing to, and negotiating with potential developers and partners, without prejudice to the determination of a detailed application in due course, that the Council has agreed that the project proposal would meet the Council’s projects criteria.  The Council has also agreed that budgetary provision equivalent to 79% of the estimated total project cost (£93,749,000) should also be made for the project proposal for a period of up to twelve months pending receipt of a detailed application.
5  I must inform you, however, that the Council’s in principle support for these project proposals is subject to the condition that the project should be implemented in phases, broadly equal in terms in floor space and  costs for which individual detailed applications should be made.  To clarify this point, the assumption is that the college should have successfully completed phase 1 before implementing phase 2 and any further phases.  The grant support intervention rate will be calculated for each phase of the proposal as and when they come forward to the Council for determination.
  From AiP to detailed application
57.	Most of the year 2008 was taken up with moving the application from AiP to a state in which it could be submitted for AiP.  By May 2008, Davis Langdon LLP had replaced Tribal Property Limited as project manager (although the individual responsible, Mr Robert Hardy, moved from Tribal Property to Davis Langdon, thus providing continuity); BAM Construction Limited was appointed as main contractor; and work by the Institute and its advisors towards preparation of the detailed application was well under way.
58.	In June 2008 a serious problem raised its head.  It will be recalled that AiP had been given on the footing that the project would proceed in two distinct, and roughly equal, phases.  It became apparent to the Institute and those advising the Institute that this two phase implementation would have serious disadvantages.   The principal disadvantages were: an escalation in cost to a figure well in excess of that for which AiP had been given (the main contractor put the cost of a two phase construction at £160 million); disruption during the second phase (because the first phase would, in effect, amount to the construction of one half of a single building); the risk that AiD might not be obtained for the second phase; and the risk that contractors would have the Institute “over a barrel” on pricing for the second phase because of the need for continuity.
59.	This matter was considered at a meeting at the LSC’s offices in Coventry on 29 July 2008.  The meeting was, contrary to the case originally advanced by the Institute, convened at the request of the Institute, not at that of the LSC.  The persons present included Mr Ellis and Mr Clarke from the Institute, and Mr Green and Mr Grindlay of the LSC.  All of these apart from Mr Grindlay, who is seriously ill, gave oral evidence.  The account of the meeting which I find to be reliable is that which was given by Mr Green.  
60.	The upshot of the meeting was that the Institute was to revise its plans so as to submit a single phase project for AiD.  Mr Green said during cross-examination:
They had a good case, but they would have to come up with figures.  We would support the proposal for a single AiD, if there was a real prospect of getting AiD.  Mr Grindlay said that, if a sufficient case was put up, he would support it.  He did say that we, as officers, would have a difficult time at the National Capital Committee.  I told Mr Hardy [this must have been after the meeting, as Mr Hardy was not there] that the departure from AiP was a concern.
61.	It is, I think, a fair reading of the evidence as a whole that proceeding with a single phase application for AiD was something which had the support, but the cautious and qualified (particularly as to cost) support, of the responsible officers at LSC.  On the Institute’s side, there was a recognition that AiD could not be taken for granted and that the situation after the change to a single phase bid was less certain than it had been previously.  Thus, in the risk register which was compiled on a monthly basis by Davis Langdon, one finds as at 30 June 2008 that the risk that the LSC do not continue with a positive approach to the project is put at 50 per cent; but by 30 October 2008, that risk factor has increased to 0.8 (the equivalent of 80 per cent).
62.	In the meantime quite significant enabling works were being undertaken on site.  These included the conversion of the Institute’s Business Solutions Centre to workshops; the construction of a new brick workshop; and the provision of a temporary car park.  The approval of these works, together with the incurring of professional fees, was said by Mr Ellis in an e-mail of 10 September 2008 to “have tested the risk appetite of our Governing Body.”
63.	The detailed application on the single phase basis was submitted to the LSC on 27 October 2008.  The project cost was £154,068,000 before inflation and £161,772,260 after inflation.  The contribution sought from the LSC was £135,080,000, which represented an intervention rate of 85 per cent.
64.	From the point of view of the LSC, the figures in this application were, as Mr   Green said in evidence, “seriously too high.”  They were high in a double sense: they exceeded both the level of grant which was anticipated by the LSC and they were much greater than the amounts on the basis of which AiP had been given.  This view was made clear to the Institute, which set about revising the detailed application, which was then re-submitted on 27 or 28 November 2008.  The figures had come down: project cost, £140,028,661 before inflation and £146,754,863 after inflation; contribution sought, £115,936,000; intervention rate, 79 per cent.  
65.	The Institute had been working towards having the detailed application considered at a meeting of the National Council of the LSC on 17 December 2008.  The application would first have to pass through a meeting of the Regional Capital Committee earlier in the month.  As was made clear by Mr Green in an e-mail of 3 December 2008 to Professor Khan, the late submission of the revised application had made this timescale one which could not be met. It was then hoped to have the papers ready for the meeting of the Regional Capital Committee fixed for January 2009.
66.	The papers were not, I think, ready in time: but it would have made no difference to the outcome if they had been.  The balloon was about to go up.
The collapse of funding
67.	The National Council of the LSC met on 17 December 2008 as planned.  The papers prepared for the meeting and the minutes are documents of considerable length.  Put very shortly, the LSC found that it was running out of money.  It did not have sufficient funds to grant AiP or AiD to applications which, on their merits, might have been successful.  There had, as matters were later described in a draft Report of the Committee on Public Accounts, been “a catastrophic mismanagement of the LSC capital budget during 2008 and neglect of oversight by those in senior positions in the LSC.”
68.	The following decisions were taken at the meeting of 17 December 2008.  Decisions on all applications listed for AiP or AiD at the meeting of 17 December were deferred to the meeting of 4 March 2009.  There would be a general deferral of the determination of all capital applications pending a review of the capital programme.  The outcome of this review would be considered at the meeting of 4 March 2009.   The Capital Committee meetings for January and February 2009 were cancelled, and there was to be no consideration of projects by Regional Capital Committees.  At the meeting of 4 March 2009 the Council would confirm the timescales and the terms on which pending applications might be considered.   Communications about all this “needed to be urgently and sensitively handled.”
69.	On 9 January 2009 there was a meeting in Bradford between representatives of the LSC and of the Institute.  It is sufficient to say that the funding difficulties of the LSC and the concerns of the Institute over any delay in the funding of the project were the main subjects for discussion.
70.	Work continued, probably in hope rather than in expectation, on a further revision to the detailed application with a view to reducing costs.  The application in its final form was submitted around 25 February 2009.  The cost of the project before inflation had come down to £138,948,385; after inflation, the cost was £139,950,000; the contribution sought from the LSC was £106,000,000; the intervention rate was in the region of 76 per cent.
71.	At the meeting of the National Council on 4 March 2009, it became apparent that the situation faced by the LSC was even more serious than had been anticipated.  79 projects had received AiP, with £2.7bn required from the LSC: the extent by which the grants of AiP exceeded funds which could be made available at AiD stage is apparent from the fact that, as will be seen, a few months later, AiD could be given to only 13 of these schemes.  The meeting was told that Sir Andrew Foster had been asked by the Secretary of State to carry out a review, and in the meantime the LSC was working on a consultation exercise to identify a strategy for prioritising all future projects.
72.	On 16 March 2009 Ms Lyon wrote to Professor Khan to inform him of the current situation, and told him that, pending the completion of the consultation exercise, “as previously advised, your college should continue to avoid incurring any further costs in developing its project.”
73.	On 1 April 2009 Sir Andrew Foster’s Review of the Capital Programme in Further Education was presented to the House of Commons by the Secretary of State.  This contained a damning indictment of financial management at the LSC.  The implementation of the laudable policy to transform the FE estate “did not include a robust financial strategy or a regional or national approach to prioritisation.”  Overcommitment to projects should have been detected sooner and, on the basis of “plenty of experience in the public sector”, might have been anticipated so that “the surge [in take-up] could have been mitigated and managed.”  There was a “champagne moment culture” in which AiP was celebrated “as the point of no return.”  It seemed to be normal practice for projects not to be rejected at detailed stage, provided that costs stayed in line with those which had received AiP.
74.	On 21 April 2009 Professor Khan wrote to the chief executive of the LSC.  He set out the “severe consequences” for the project of the “current suspension of capital projects and the lack of clear timescales going forward.”  He said that the Institute “need[ed] to recoup from the LSC the development costs of the project.”  He enclosed a breakdown, which showed costs of £4,768,452, incurred under eight headings: architects; project managers; quantity surveyors; building contractor; mechanical and electrical consultants; structural and civil consultants; enabling works; and “other (including planning).”  From the total, Professor Khan deducted grants of £790,000 and £250,000 received from the LSC, leaving a balance (for which he enclosed an invoice) of £3,728,452.  I should say that I have been unable to trace documents relating to the larger of the two grants, but the receipt of that sum by the Institute is not a matter of controversy.
75.	On 24 April 2009 the chief executive wrote to Professor Khan.  The letter does not appear to be a direct reply to Professor Khan’s letter of 21 April, but rather a standard letter designed to be sent to all FE college heads.  As regards projects awaiting approval, PricewaterhouseCoopers had been appointed to assist in the preparation of new criteria for prioritisation.  As regards costs, once the LSC had “a full analysis of the costs and their nature” it would “be able to identify those cases where a contribution to such costs from the LSC may be justified.”
76.	On 27 May 2009 the Institute sent the pre-action  protocol letter to the LSC.
77.	On 19 June 2009 the LSC replied.  There are three points of particular significance in the letter.  First, the Institute’s application for AiD would be considered in accordance with the LSC’s new prioritisation process.  Second, the Institute had been responsible for delay in submitting the detailed application, by reason of the change in the scheme and the costs being in excess of those for which AiP had been given.  It was “not until February 2009 that the cost of the scheme had reached a reasonable level.”  Third, the failure to reimburse costs over and above the payments already made was not unreasonable.
78.	The LSC, with the assistance of PricewaterhouseCoopers, then proceeded to the assessment of applications so as to select those which should be supported with additional capital funding which had been provided by HM Treasury.  The details of the assessment exercise have not been examined in the course of the hearing.  The competitors were those applications which were “shovel-ready”, that is to say, where work could begin within three months.  They were then awarded points under various criteria, and the 13 colleges with the highest overall scores were allocated funds.  The Institute missed, but only by a narrow margin, coming into the top 13.  The Institute was informed of the fact that it had been unsuccessful by a letter of 26 June 2009.
79.	As a result, the project for the redevelopment of the Nuns Corner site is, for all practical purposes, dead.
80.	There remained the question of the Institute’s wasted expenditure.  The LSC sent out a questionnaire about costs incurred by applicants for grants whose cases would not be going any further.  209 colleges returned the questionnaire duly completed.  In round figures: the total amount spent by colleges on costs relating to capital projects which did not obtain AiP or AiD was £340 million; £94 million was due to the colleges under the established arrangements for fee support; the gap between the two figures was £246 million.  The latter sum was simply something which the LSC could not afford.
81.	The decision eventually taken by the LSC was to reimburse those colleges who would face possible insolvency if there were not reimbursed.   There were 41 such colleges and between them these received payments which came to £44 million.  
82.	I was told that the Institute is the only college which has challenged the decision not to reimburse it in full.
The Law
Preliminary
83.	Mr Randall put before the court nine propositions of law, which provided him  with headings for what I found an impressive and comprehensive review of the subject of legitimate expectation in public law.  In this section of the judgment, it will be convenient to set out those propositions, together with Mr Knox’s response and, where this seems to be required, some observations of my own. 
First proposition
84.	“Save in an exceptional case, a legitimate expectation founded on a representation requires that representation to be clear and unambiguous.”   The authorities relied upon are R v Inland Revenue Commissioner, Ex parte M.F.K. Underwriting Agents Ltd and R (Association of British  Internees: Far East Region) v Secretary of State for Defence (hereafter ‘ABCIFER’).
85.	Mr Knox accepted this proposition, subject to the qualification that a statement must always be read in context.  One has to consider, as was said in the judgment of the Court of Appeal in ABCIFER how “on a fair reading” a statement “would reasonably have been understood by those to whom it was directed.”
86.	There is no real difference between counsel on this point.
Second proposition
87.	“A legitimate expectation founded on a past practice requires there to have    been a specific undertaking to an individual or group whereby its continuance is assured.”  The authority relied upon is R (on the application of Bhatt Murphy (a firm)) v The Independent Assessor.
88.	Mr Knox did not question the proposition but, rather, turned it to the advantage of the Institute by relying on the following passage from the judgment of Laws LJ in the Bhatt Murphy case.
43  Authority shows that where a substantive expectation is to run the promise or practice which is its genesis is not merely a reflection of the ordinary fact (as I have put it) that a policy with no terminal date or terminating event will continue in effect until rational grounds for its cessation arise.  Rather, it must constitute a specific undertaking directed at a particular individual or group by which the relevant policy’s continuance is assured…
44   I will give two concrete examples from the cases.  In Ex p Khan [1985] 1 All ER 40 the Home Office promulgated specific criteria for the admission of children into this country for the purpose of adoption here.  The appellant sought entry for his prospective adoptive child.  He relied in terms on the published criteria which he fulfilled.  But he found his application blocked by a further, unannounced criterion which he did not satisfy.  This court allowed his appeal.
             “This”, Mr Knox said, “is my case.”
Third proposition
89.	“Although an abuse of power through acting with conspicuous unfairness can arise without any legitimate expectation being infringed, such cases are highly exceptional.”  Although this proposition, which was accompanied by a lengthy review of the authorities, was accepted by Mr Knox as being “what the authorities say”, I would myself put it slightly differently.  It seems to me that abuse of power cases are properly characterised as legitimate expectation cases.  The expectation is, however, not based on a specific representation, but is of a more general kind, namely, that a public authority will not act so unfairly that its conduct amounts to an abuse of power.  But, perhaps more importantly, it is common ground that cases of legitimate expectation not founded on a representation are highly exceptional.
Fourth proposition
90.	“The requirements for legitimate expectation in public law are now sufficiently developed to stand separately from private law doctrines such as estoppel, and should do so, being more sensitive, and tailored to, the particular context of public law.”  The authorities relied upon are R (Reprotech (Pebsham) Ltd) v East Sussex County Council, and the Bhatt Murphy case which was previously cited.
91.	Mr Knox accepts this proposition, but reminds the court that the moral values of estoppel have been absorbed into public law.  Further, while the remedies in private and public law cases are quite different, the approach of the court to the interpretation of statements is the same.
Fifth proposition
92.	“Legitimate expectation not being the same as estoppel, detrimental reliance is not essential to making it out, though it remains highly relevant.”  There was extensive citation of authority in support of this proposition, which was accepted as correct by Mr Knox.
Sixth proposition
93.	“When allotting an alleged legitimate expectation as between the three Coughlan categories, the correct approach is that of the Court of Appeal in Bibi.”
94.	This proposition requires some exegesis from me.  In R v North and East Devon Health Authority, Ex parte Coughlan, there is in the judgment of the Court of Appeal a somewhat involved discussion of the role of the court in legitimate expectation cases.  The starting-point is to determine what was the legitimate expectation of a member of the public as to how he would be treated by a public authority.  There are at least three possible outcomes of the enquiry.  (1) The court might decide that the authority was only required to bear in mind its previous policy or representations giving them the weight it thought right, but no more, before deciding whether to change course.  (2) The court might decide that the promise or practice induced a legitimate expectation of being consulted before a particular decision is taken.  (3) The court might decide that a lawful promise or practice has induced a legitimate expectation of a benefit which is substantive.
95.	Once it has been decided into which category a legitimate expectation falls, the role the role of the court differs according to the category.  In category (1), the court is limited to reviewing the decision on conventional Wednesbury grounds.  In category (2), the court has to determine whether the decision was procedurally fair, and will require the opportunity for consultation to be given unless there is an overriding reason to depart from it.  In category (3), the court will have to decide whether to frustrate the expectation is so unfair as to amount to an abuse of power and, when necessary, to decide whether there is a sufficient overriding interest to depart from what has been promised.
96.	Coughlan was decided in 1999.  R (Bibi) v Newham London Borough Council came before the Court of Appeal two years later.   As I read the latter decision, it is dealing not so much (as is suggested by the sixth proposition) with the allocation of cases between the Coughlan categories, but rather with rhe resolution of cases which fall within category (3), where the relevant legitimate expectation is that of a substantive, and not merely a procedural, benefit.   Bibi qualifies Coughlan in two respects.  First, doubt is expressly cast on the approach which suggests that the question for the court in a category (3) case is whether the authority by reneging on its promise was acting so unfairly as to be an abuse of power. This question provides an uncertain guide, because a major part of the problem in legitimate expectation cases “is that it is often not adequate to look at the situation of the disappointed promisee” apart from the situations of the promisor and (sometimes) of many other persons to whom promises have been made.  Secondly, doubt is cast by implication upon what was said in Coughlan about the remedy in category (3) cases.  The judgment of the court, which was handed down by Schiemann LJ, contains the following passages:
40  The court has two functions  –  assessing the legality of actions by administrators and if it finds unlawfulness on the administrators’ part, deciding what relief it should give.  It is in our judgment a mistake to isolate from the rest of administrative law cases those which turn on representations made by authorities. The same constitutional principles apply to the exercise by the court of each of these two functions.
41  The court, even where it finds that the applicant has a legitimate expectation of some benefit, will not order the authority to honour its promise where to do so would be to assume the powers of the executive.  Once the court has established such an abuse it may ask the decision taker to take the legitimate expectation properly into account in the decision making process…
43   While in some cases there can only be one lawful ultimate answer to the question whether the authority should honour its promise, at any rate in cases involving a legitimate expectation of a substantive benefit, this will not invariably be the case.
97.	Mr Knox was prepared to accept in general terms that the judgment in Bibi provided the road along which the court now has to go: but he emphasised that Bibi should not be considered in isolation from other cases on legitimate expectation, and he drew my attention to  two other passages in the judgment in Bibi:
39 But, on any view, if an authority, without even considering the fact that it is in breach of a promise which has given rise to a legitimate expectation that it will be honoured, makes a decision to adopt a course of action at variance with that promise then the authority is abusing its powers…
59 But when the authority looks at the matter again it must take into account the legitimate expectations.  Unless there are reasons for not giving effect to those legitimate expectations then effect should be given to them.
Seventh proposition
98.	“(1) It is clear that in non-ECHR/EU cases, the test of proportionality has not been substituted for the Wednesbury principle. (2) That being so, many of the comments about balancing the public and private interests in Coughlan have to be read with caution.”  I have divided this proposition into two parts in order to take account of Mr Knox’s response.
99.	Mr Knox accepted sub-proposition (1) as correct.  Several authorities were cited by Mr Randall: the point was perhaps most clearly articulated in 1991 in the decision of the House of Lords in R v Secretary of State for the Home Department, Ex parte Brind.  Mr Knox, however, rejected sub-proposition (2), on the basis that Coughlan had been approved in, and survived, Bibi. I have already referred to the Coughlan categories.  The controversy here is focused on category (3), where a promise resulting in a substantive legitimate expectation has been broken.  It was common ground in Coughlan that the public authority could break its promise (to permit the claimant to remain in a particular care home for the rest of her life) if, and only if, an overriding public interest required this.  The court said:
Both [counsel] adopted the position that, while the initial judgment on this question has to be reached by the health authority, it can be impugned if improperly reached.  We consider that it is for the court to decide in an arguable case whether such a judgment, albeit properly arrived at, strikes a proper balance between the public and the private interest.
100.	I think that, so far as the application of the law to the facts of the present case is concerned, this debate may well be an academic one.  I will therefore deal with it briefly.  I have already commented on the relationship between the decisions in Coughlan and Bibi.  I agree with Mr Randall, but only to this limited extent: while a striking of the balance between the public and the private interest may be required in some cases, Bibi provides a reminder that the court should not concentrate on the understandable disappointment of the claimant to the exclusion of wider considerations. 
Eighth proposition
101.	“The fact that maladministration has occurred is not a ground for judicial review.  The question is only  –  has the public body acted unlawfully?”
102.	Mr Knox agreed with this proposition, subject to the qualification that, while     maladministration is not a ground for judicial review, “it is still relevant in deciding whether it is fair to allow a public body to change its practices.”  I have to say that I do not really understand the qualification.  It seems to me, with respect, to come close to contradicting the main proposition, at any rate in legitimate expectation cases.  The question must always be whether the act of the pubic body is unlawful.
Ninth proposition
103.	“In deciding what, if any, relief should be granted, the court will take into account (a) whether the decision challenged is in the macro-political field, and/or (b) involves social or political value judgments as to priority of expenditure, and/or (c) the nature and clarity of the promise or prior practice in question.”  There was, once again, extensive citation of authority.
104.	This ninth proposition is, I think, incontrovertible.  Mr Knox limited his response to saying (and I agree) that it is simply not realistic to characterise the decisions in this case as having been made in the macro-political field.
Discussion 
The claim as pleaded
105.	Formally, the challenge made in these proceedings is to the decision,  which   was conveyed to the Institute by the letter of 26 June 2009, that its application for funding was not going to proceed to AiD.  As I have already stated, the claim has effectively turned into one for wasted expenditure, so that the true challenge is to the decision not to reimburse the Institute in full.  The heart of the Institute’s case is to be found in paragraph 28 of the Amended Grounds of Claim:
By so encouraging the Institute, the LSC implicitly represented to it that if and when it obtained AiP, (a) its application for AiD would be dealt with and approved in the usual way (subject to satisfying the LSC of relevant criteria) and (b) the LSC was and would continue to be properly financed and organised, so that it could deal with (and approve) such application in the usual way.  Accordingly, the Institute had a legitimate expectation to this effect.  Had it not been for this encouragement, the Institute would not have undertaken a project of this magnitude.
106.	This formulation was criticised by Mr Randall on the basis that one could not derive from it any clear meaning, phrases like “the usual way”, “properly financed” and “properly organised” being shot through with ambiguity.  In my judgment, the criticism is not a sound one.  The meat of the alleged representation – for it seems to me that one is looking at a single representation expressed in alternative ways – is that the Institute’s application for AiD would be dealt with on its merits and without regard, as Mr Knox put the matter early in his closing submissions, to the financial state of the LSC.
107.	Whether any such representation was implicit in things said or done on behalf of the LSC is, of course, quite a different matter.
The alleged representations
108.	In his closing submissions, Mr Knox set out the representations on which the Institute was relying.  They fell into two main groups, of which the second was further sub-divided. (1) There were representations made in the Institute’s Capital Handbook.  Even if these stood alone the Institute would, on Mr Knox’s submissions, be entitled to succeed.  (2) There were representations made otherwise than in the Handbook.  These were: (i) representations made prior to 13 October 2006, namely (a) on 18 August 2006, (b) on 15 September 2006, and (c) in the undated letter from Ms Lyon which was produced at the meeting of 26 September 2006; (ii) representations made on the 13 October 2006; (iii) representations which were (a) implicit in the dealings of the LSC thereafter, and (b) particularly in the AiP letter of 31 January 2008.  
109.	I will consider these groups of alleged representations in turn.
Group 1 representations: the Capital Handbook
110.	The parts of the Handbook which Mr Knox treated as central to his submission are paragraphs 7.3 (the stage to which a project must be developed before it can be considered for AiP), 8.5 (fee support leading to the application for AiD) and, more particularly, Annex A.  There is within Annex A, at paragraph 6, reference to competition for funds; and, at paragraphs 23-31 the criteria for selection of projects.  Finally, there is paragraph 32 of Annex A, the reference to moderation arrangements to determine the relative priority to be given to competing applications where insufficient funds are available to meet all applications.
111.	The thrust of Mr Knox’s submissions was that Annex A was limited to the stage at which AiP was being sought.  A finding to this effect is vital to the case resting on Group 1 representations because, if Annex A extends to the AiD stage, paragraph 32 opens the door to the refusal of an application on the footing that the LSC has insufficient funds to meet all applications which have received AiP.  There was, in Mr Knox’s submission, no suggestion in the Handbook that, once AiP had been obtained, there was going to be any competition for grants.  Two of the selection criteria, those relating to preference being given to projects which are put forward in order to meet legal requirements and which are to be financed on a public-private basis or on loan, supported the view that the Annex applied only up to AiP.
112.	Mr Randall disagreed.  He pointed out that Guidance Note A which is part of the Handbook required the same application form to be used for applications for both AiP and AiD and that nearly all the requirements set out in the Guidance Note applied indifferently to both types of application.  As regards criteria according to which applications would be selected, the only published criteria were those set out in Annex A.  If they applied only up to AiP, there would be no criteria applicable at AiD stage, and that was something which must be highly improbable.  Even if one did not have the express provision as to moderation arrangements, it would be unthinkable that a public body with manifold calls on its funds was somehow debarred from exercising a choice when the funds available turned out to be insufficient to meet all those calls.
113.	In my judgment, the submissions made by Mr Randall are to be preferred.  For the reasons advanced by him, I do not accept that Annex A is to be restricted in the manner suggested by Mr Knox: and, as soon as one treats the moderation arrangements as applicable at AiD stage, the implied representation on which reliance is placed melts away.  Representations, even implied representations, have to be clear and unequivocal.  Nothing in the Handbook seems to me to come anywhere close to implying that, once AiP has been obtained, the availability of funds to the LSC becomes irrelevant.

Group 2(i) representations: representations prior to 13 October 2006
Representation 2(i)(a): meeting on 18 August 2006
114.	The relevant pleading is in paragraph 5B(1) of the Amended Grounds of Claim.
At a meeting on 18 August 2006, Mr Green of the LSC informed the representatives from the Institute (Professor Khan, Mr Adrian Clarke and others), from Hereford School and Franklin Sixth Form College: (a) that the LSC fully supported the masterplan; (b) that a “total new rebuild should be considered as an option for all parties”; (c) that the LSC had an additional £350 million over the next three financial years.  (The LSC relies on the Institute’s own minute of this meeting).
115.	The three points recorded in paragraph 5B(1) as having been made by Mr Green come verbatim from the minute referred to.  Mr Green in evidence accepted the accuracy of the minute.
116.	I have real difficulty in grappling with this part of the Institute’s case.  (a) is a representation of the LSC’s attitude or collective state of mind and is not said to be inaccurate.  (b) is a suggestion, or recommendation, as to how matters might or should proceed.  (c) is a representation of fact and is not said to be inaccurate.  I am simply unable to derive from these statements, individually or taken together, an implied representation to the effect that, if an application for a capital grant were to be made by the Institute, and if (at some undefined time in the future) AiP were to be obtained, the availability of funds to the LSC would thereafter be irrelevant in determining an application for AiD.  The Institute has, as I see matters, got to get as far as that to establish a case on implied representation and it gets nowhere near doing so.
Representation 2(i)(b): meeting on 15 September 2006
117.	 The pleading is in paragraph 5B(3) of the Amended Grounds of Claim:
At a meeting on 15 September 2006 to discuss option 4, attended by Professor Khan, Mr Ellis, and Mr Clarke for the Institute, by Mr Bob Flockton for the LSC, and representatives from the North East Lincolnshire Council and Dyers (who had drawn up the masterplan):
(a) There was discussion about the financial backing for the project and the requirement for it to be considered within “two year window of opportunity with the LSC”;
(b) Mr Bob Flockton confirmed that the LSC had agreed the project in principle and to explore what level of funds would be available to support the development costs.
118.	The statements are recorded in a minute taken for the Institute.  The witnesses from the Institute confirmed the accuracy of the minute.  No one who attended the meeting on behalf of the LSC gave evidence.  Mr Green made the observation that he would have thought that the phrase “two year window of opportunity” would be more likely to have been used by a representative of the Institute rather than by an officer of the LSC.
119.	My difficulty with this part of the case is the same as that which I had with the previous representation. This meeting took place at an early stage.  Discussions were still exploratory in nature.  The LSC was, as the witnesses from the Institute stated (and as I accept), adopting a positive and encouraging attitude to the project.  That, however, is the beginning and end of the matter.  It is, in my judgment, once again simply impossible to translate these statements into the kind of implied representation which is embodied in paragraph 28 of the Amended Grounds of Claim.
Representation 2(i)(c): Ms Lyon’s undated letter
120.	 I have precisely the same problem as with representations 2(1)(a) and 2(1)(b).  The letter is expressly supportive of the Institute’s plans, albeit cautiously so (“we need to determine… whether this radical plan is worthy of further investigation”).  But the letter, read as a whole, is tentative in nature and, once again, falls far short of being able to bear the weight which Mr Knox seeks to place upon it.
Group 2(ii) representations: meeting on 13 October 2006
121.	This was the large gathering at Bradford attended by representatives of many FE colleges and of the LSC.  It is said in paragraph 6 of the Amended Grounds of Claim that “[t]he attendees were briefed on the process for applications and then the LSC staff positively encouraged the Colleges to put in binds for large capital developments as the LSC was said to have “significant under spend” (italics in original).
122.	There has been controversy about what was said at the meeting but, on reviewing my notes of the evidence, some of the points of difference between the two sides seem to have disappeared.  Thus Mr Ellis, for the Institute, was unable to say firmly that phrases like “once in a lifetime opportunity” and “significant under spend” were used at this (rather than at some other) meeting.  On the other hand, Mr Green, for the LSC, accepted that colleges were invited to come back to the LSC with proposals, and he also agreed that the LSC was in effect informing colleges that they had a once-in-lifetime opportunity to obtain funding.  
123.	Mr Green was an impressive witness, who gave his evidence in a measured and transparently honest manner.  Mr Ellis was argumentative  and, on one other significant part of the history, has been shown up as unreliable.  Mr Clarke’s recollection was exposed in cross-examination as being patchy and uncertain.  The only safe course (which I adopt without hesitation) is therefore to accept what Mr Green said.  I will set out the bulk of my notes of the relevant part of his cross-examination:
I can’t recall ‘world class buildings’ being mentioned at the meeting.  We did not encourage [colleges] to come back with mega-schemes.
Colleges were not asked for big buildings.  They were asked to go away, look at their estates and come back with proposals.
I can’t recall the LSC using the phrase ‘once in a lifetime.’  I think ‘support’ rather than ‘encourage’ was the word used.  It was a positive message.
The extra £350m over 3 years was not mentioned, but there was a slide showing the money available.
I don’t think [LSC officers] said there was an under spend.  They did say that there were insufficient projects coming forward so that Yorkshire and Humberside were not doing well compared to other regions.  Yorkshire and Humberside were missing out on the opportunity to get [funds] from the national budget.
I don’t recall it being said that there would be competition for AiD among projects which have AiP
124.	It is common ground that the information imparted by the LSC at the meeting included an explanation of the procedure for obtaining capital grants with express mention of the AiP and AiD stages.  On the basis of Mr Green’s evidence, the college representatives were told that funds were available and that they should go away and think about applying for grants for capital projects.  But I find it impossible to derive from anything that was said, or from the positive tone of the meeting, a representation of the kind relied upon.  It must not be forgotten the representation pleaded in paragraph 28 of the Amended Grounds of Claim comes to this: that, in the event of AiP being granted, there would be excluded from further consideration by the LSC both the totality of funds available to the LSC and other calls upon those funds.  Once again, I find that there are light years between matters established as having been said or done on the one hand and what the Institute seeks to infer from those matters on the other hand.
Group 3 representations: representations after 13 October2006
Representation 3(i):“implicit in all other dealings”
125.	This is far too vague and unparticularised.  It is true that the officers of the LSC adopted a positive attitude towards the application for AiD.  It is clear from the evidence that they regarded it as part of their job to assist an applicant (if necessary, by constructive criticism) to work up a project to a state in which it was suitable for submission to the relevant decision-making bodies at the LSC.  Indeed, the officers appear to have been unwilling to bring a project to committee unless it was such as they felt able to recommend for approval.  But none of this seems to me to be apt to convey to the mind of the applicant, and in particular the Institute, the message that consideration of a detailed application would be confined to the inherent merits of the application.
Representation 3(ii): letter of 31 January 2008
126.	This letter was put forward by Mr Knox as coming close to an express representation.  He attached particular importance to the passage in which Professor Khan was informed that budgetary provision for 79 per cent of the cost of the project was being made for a period of up to 12 months pending receipt of the detailed application.  This was, Mr Knox submitted, tantamount to saying “the money will be there if you satisfy the criteria.”
127.	This letter had not been pleaded as a representation in the Amended Grounds of Claim and was not dealt with, or complained about, by any of the witnesses for the Institute.  It raised its head only in Mr Knox’s cross-examination of one of the witnesses for the LSC towards the end of the case.  I appreciate the force of Mr Randall’s objection that “it is grossly unfair to bounce the defendant into a legitimate expectation argument based on this letter.”
128.	I do not think that Mr Randall needed to be too concerned.  If the information about budgetary provision stood alone, it would be arguable that it could be read as conveying to the reader the message that funds had been ring-fenced and that there was something close to a guarantee of availability.  But the passage has to be read in context.  It follows immediately upon a sentence which informs the Institute that AiP has been granted “without prejudice to the determination of a detailed application in due course.”  There is, once again, a total absence of words from which one could fairly infer the exclusion from consideration by the LSC of financial matters external to the application.
129.	Mr Randall put his point succinctly:
The sentence does not support the paragraph 28 representation.  It is a late thought to salvage a fatally flawed case.
	I agree.
Conclusion on representations
130.	The case for the Institute was put primarily on the basis of legitimate expectation based upon implied representations.  For the reasons set out in the foregoing paragraphs, I do not think that the paragraph 28 representations can on any objective basis be regarded as implicit in the words and actions relied upon by the Institute.  There was, in my judgment, nothing in the nature of a clear and unambiguous statement of the kind required to found a legitimate expectation (the first proposition of law discussed above).
131.	Mr Randall made several points which demonstrated to my mind that the evidence given on behalf of the Institute was inconsistent with the case presented on its behalf.
132.	First, none of the witnesses for the Institute said that he understood the paragraph 28 representation to have been implicit in the words relied upon as constituting that representation.  The statements now relied upon never seem to have registered contemporaneously with the Institute’s own officers.
133.	Second, although detrimental reliance is not essential to making out a case of legitimate expectation, it is relevant (the fifth proposition of law), yet reliance is not actually claimed by any of the witnesses for the Institute.
134.	Third, there was throughout the process of applying for AiD an appreciation on the part of the officers of the Institute that they were proceeding at risk of failure.  It would be remarkable if, after the risk came to fruition, a claim based on legitimate expectation of success were to be established.  
The claim based on practice
135.	There was not, in my judgment, anything in the nature of a specific undertaking to colleges that a practice (if it existed) of confining consideration of an application for AiD to the merits of that application would continue (see the second proposition).  The real weakness of the Institute’s case here lies in the impossibility of finding in the Capital Handbook or elsewhere any assurance of the kind which would be required to found a practice-based legitimate expectation.
The claim based on conspicuous unfairness
136.	This is an alternative way of putting the case for the Institute.  I have dealt with the relevant legal principles earlier (the third proposition).  There can be no doubt as to three matters: a case of legitimate expectation not founded on a representation must satisfy the test of conspicuous unfairness; such cases are exceptional; and whether a case falls within this exceptional category is entirely dependent on the facts.
137.	In his closing submissions Mr Knox put the conspicuous unfairness claim in this way:
My clients were encouraged to apply for a very substantial grant in circumstances in which it was known that they would incur very substantial fees.  The fees were bound to be far greater than the subsidised amount [reference was made to the Capital Handbook]. They have not been accused of extravagance.  It is unfair to turn them down at the last moment on the ‘no money’ basis… The fault lay with the LSC, not with us.
138.	It is, of course, understandable that the outcome of the application for AiD was  a considerable disappointment to the Institute.  Further, the Institute has been left with substantial unreimbursed expenditure.  What happened cannot be dismissed as “just one of those things.”  But, in my judgment, the facts of the case fall a long way short of what is required to make out, as can only be done in a rare case, conspicuous unfairness on the part of a public authority.  There was no departure by the LSC from any published practice or concession.  The Institute acted throughout with what Mr Randall aptly called “an active appreciation of risk.”  The Institute was not left entirely out-of-pocket, but received the maximum contribution to costs available under the guidelines in the Capital Handbook.  The Institute’s request for the additional amount now claimed was not dismissed out of hand, but was considered together with similar requests from many other colleges.  The result for the Institute is most unfortunate, but it cannot be characterised as the product of an abuse of power by the LSC.
The true analysis
139.	The debacle which gave rise to this litigation did not, in my judgment, leave  the Institute without any rights in public law.  It must, I think, have had a right to due consideration of its request for reimbursement along with the requests made by other colleges who returned the questionnaire regarding costs to the LSC.  But that right has been satisfied: the request was considered and the decision to apply such funds as were available to meeting the expenses incurred by colleges which were facing insolvency cannot be stigmatised as irrational.
Disposal
140.	It follows from what I have said that the claim for judicial review must be dismissed.
Quantum
141.	 In case the litigation goes to appeal and my decision is held to be wrong, I should say a little about the relief which I would have granted if I had held the case of the Institute to be sound in principle.
142.	The very short statement of expenditure put in evidence by the Institute would not be an adequate foundation for an order for payment of the sum alleged to be due.  There are three matters which require attention.  First, the claim is unvouched.  Secondly, it seems to me that expenditure incurred prior to AiP should be quantified and excluded.  Thirdly, it may be that the Institute has derived value from some of the enabling works carried out after AiP and, if so, that there should be some deduction in respect of betterment.  I would therefore have directed, in the absence of agreement between the parties, a short hearing at which to determine any outstanding issues on quantum.
Envoi
143.	I do not pretend to have dealt with every point that was canvassed either in evidence or in submissions.  That is, in part, the result of a determination on my part to avoid missing the wood from the trees.  It is all too easy to fall into that trap in a case like this, which did not merely suffer from documentary overload but was not simplified (I put the matter gently) from the making of quite substantial additions to the court papers as the hearing progressed.  I have tried, and I hope succeeded, not to omit consideration of anything of real importance.