3. England

In England, public bodies may grant compensation to victims of administrative blunders by means of ex gratia payments without admitting legal liability.⁵⁸ Statutory schemes have similarly been set up to provide for compensation. The analysis of non-judicial means of gaining compensation will be structured as follows. First, we will look at the role of ombudsmen in facilitating ex gratia payments. Secondly, we will examine the developing consciousness within the administration of the need to provide ex gratia payments for maladministration as a matter of course. There will inevitably be some overlap with the comparative law analysis of administrative and statutory schemes for awarding compensation in England and France (section 4 below).

One initial point will be made. There can be difficulties in delimiting the boundaries of ex gratia payments. In orthodox terms, ex gratia payments are grace and favour payments made by public bodies where there is in fact no legal liability to make financial reparation.⁵⁹ These are to be contrasted with payments made by public bodies when they have negotiated a settlement with a claimant on the basis that they are legally (p.245) liable. In this study, we will focus upon the first category: it is difficult to obtain detailed information on the procedures leading to negotiated settlements,⁶⁰ and the occurrence of settlements is evidently limited by the restrictive stance of the courts in respect of the tort liability of public authorities acting in the exercise of their statutory functions.

3.1. Investigation by Ombudsman

Ex gratia payments may be made after investigation by an ombudsman. In this section, we will examine the work of the main public sector ombudsmen: the Health Services Commissioner, the Parliamentary Commissioner for Administration, and the Local Government Ombudsman.⁶¹

The Health Services Commissioner (HSC) investigates complaints about the National Health Service.⁶² If a complaint is upheld, the HSC will make recommendations to avoid a repetition of similar maladministration, but the recommendation of a financial remedy is rare.⁶³ It has always been underlined that the HSC procedure is not designed for those who are looking for damages.⁶⁴

The Parliamentary Commissioner for Administration (PCA)⁶⁵ and the Local Government Ombudsman (LGO)⁶⁶ can recommend financial (p.246) remedies when injustice has been caused by maladministration of a public body within their remit.⁶⁷ There is no statutory definition of ‘maladministration’, and differing attempts have been made to sketch the contours of this notion.⁶⁸ One thing that is clear is the flexibility of the notion of maladministration.⁶⁹ The Local Government Ombudsman has given the following examples: delay in acting; breaches of the law or the authorities' own rules or promises; provision of incorrect information.⁷⁰ The notion of maladministration relates to an abstract model of proper administration, and some parallels may be detected with the concept of administrative fault in French law.⁷¹

The maladministration must have resulted in an ‘injustice’ to the complainant. The notion of injustice has also been given a wide interpretation. The ombudsmen have shown less inhibition than the judiciary in respect of claims for reparation of pure economic loss.⁷² There are numerous examples of the LGO and PCA recommending the payment of compensation for economic loss, such as ‘loss of business opportunity’⁷³ or loss of profits.⁷⁴ The position is similar for non-pecuniary harm. Whereas feelings of anxiety and uncertainty do not constitute actionable injury in a negligence action,⁷⁵ the ombudsmen may recommend financial redress for distress⁷⁶ and worry⁷⁷ suffered by the complainant.

(p.247) On occasion, the amounts paid after an ombudsman's report can be significant. In the 1996–7 annual report, the LGO recorded an ex gratia payment of over £160,000 for injustice caused by misleading information about a council's planning policy.⁷⁸ The PCA has had some even more impressive results. Farmers who were victims of governmental maladministration in the salmonella saga received £600,000 in total,⁷⁹ and the Barlow Clowes affair resulted in ex gratia payments amounting to £150 million.⁸⁰

These important examples, however, are exceptions to the rule that ex gratia payments made after an ombudsman's intervention are generally of a modest size.⁸¹ In 1997–8, payments made after the PCA's investigation ranged from £6 to £50,000.⁸² The average was around £2,000. At a local level, sums gained are generally under £10,000, and often the award is merely a few hundred pounds ‘in recognition of time and trouble in pursuing the complaint’.⁸³

The LGO and PCA are both prevented from investigating complaints for which the aggrieved person has a remedy in court.⁸⁴ There has nonetheless been an overlap between their investigations and legal actions which have come before the courts.⁸⁵ For instance, in the social services sphere, the LGO found maladministration in the council care of a young adolescent⁸⁶ and in the investigation of child abuse.⁸⁷ In respect of special education needs, a council was found at fault in its assessment of a dyslexic child.⁸⁸ Similarities can thus be detected with the facts of (p.248) cases such as X (Minors) v Bedfordshire County Council.⁸⁹ Indeed, in that case Lord Browne-Wilkinson argued that the ombudsman system would be a more appropriate way of remedying certain grievances than litigation would be.⁹⁰ To what extent is a complaint to an ombudsman a suitable alternative to an action in damages?

There are procedural advantages of the ombudsman in terms of speed, cost, and informality. Moreover, as we have seen, the notion of injustice is more malleable than the recognized heads of loss in a negligence action, with ex gratia compensation often paid for feelings of anxiety and uncertainty, and ‘time and trouble’ in pursuing maladministration.⁹¹ The ombudsmen are much more willing than the courts to find the public authorities to be at fault. Unlike the English courts, the ombudsmen consider that public bodies and their servants are under an obligation to administer competently, as emphasized by the LGO's published list of principles of good administration.⁹² The ombudsmen can thus facilitate the granting of compensation in circumstances in which a tort claim would have failed. Whereas the informal giving of advice by planning authorities is all but excluded from negligence liability,⁹³ reports from the LGO have on many occasions led to compensation for the provision of erroneous information by planning authorities.⁹⁴ Likewise, compensation has been gained for maladministration in the granting of planning permission,⁹⁵ for instance when account was taken of irrelevant considerations in the granting of planning permission for a forestry contractor's yard next to the complainants' home.⁹⁶

Similar examples may be found in the PCA's reports.⁹⁷ In the Reeman affair, the claimants lost a substantial amount of money when the seaworthiness certificate of a fishing boat they had purchased was withdrawn as (p.249) the certificate had been based upon faulty calculations previously carried out by a Department of Transport (DoT) surveyor. The Court of Appeal held that the DoT did not owe these boat purchasers a duty to exercise reasonable care to avoid causing them economic loss.⁹⁸ A complaint was then made to the PCA, who investigated the facts and concluded that both the surveyor and the DoT were guilty of gross maladministration in respect of the boat survey.⁹⁹ The PCA recommended that an ex gratia payment should be made to the Reemans, covering the financial loss on the vessel (£134,500) plus interest and reasonable expenses and loss which had been caused by the purchase of the boat.¹⁰⁰

There are however limitations on the ombudsman procedure. The complainant has no right to compensation if his or her complaint is upheld: the ombudsman can simply recommend a remedy. The public body can, and sometimes does,¹⁰¹ ignore recommendations.¹⁰² Moreover, reparation made after an ombudsman's report is generally modest.¹⁰³ Tort actions are undoubtedly more appropriate for obtaining larger sums, and are generally the only way to gain substantial reparation for future loss, such as future loss of earnings.¹⁰⁴ An ombudsman's investigation generally focuses upon recent maladministration, with a time bar on complaints made more than a year after the maladministration came to the complainant's notice.¹⁰⁵ This compares unfavourably with the three-year limitation period applying to damages actions for negligently caused personal injury.¹⁰⁶ Moreover, some areas of administrative activity are outside the ambit of an ombudsman's investigation, such as the internal affairs of educational establishments,¹⁰⁷ and contractual and commercial transactions.¹⁰⁸