Case No: CO/1151/98

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 20 October 1998

Before:

-V-

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John Howell QC (for the Applicants)

Philip Sales (Instructed by Secretary of State for the 1st Respondents)

Nigel Pleming QC and Sean Wilken (for the 2nd Respondents)

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Mr Justice Latham:

The applicants seek to quash various schemes and orders intended to give effect to proposals to construct the Birmingham Northern Relief Road (BNRR), which if constructed, will be the first private tolled motorway of any kind. The proposals have a long history. In 1988, an Inspector, after a public inquiry, found the need for a relief road established, and recommended a route similar to the one in the proposals for the BNRR. Those recommendations were overtaken by the decision of the then government that the road should be privately financed. The necessary legislation to enable privately funded road schemes to proceed, the New Roads and Street Works Act, was passed in 1991 (the 1991 Act). The Secretary of State at the time then entered into a 53 year Concession Agreement with Midland Expressway Limited (MEL) whereby MEL would design build, finance and operate BNRR. This was signed in 1992. The necessary draft orders under the Highways Act 1980 (the 1980 Act) and 1991 Act were published in June 1993 and the draft orders for compulsory acquisition and ancillary works were published in March 1994. In April 1994 the Secretary of State's statement of reasons and list of documents for the inquiry were published. The public inquiry opened on the 21st. June 1994, and closed on the 3rd October 1995. The inspector's report was completed on the 24th February 1997. The inspector concluded that the need for BNRR had been established and, generally, approved the proposed schemes and orders. He expressed concern about an apparent lack of ministerial control over toll charges which could, in his view, be against the public interest. In the decision letter of the 23rd July 1997 setting out the Secretary of State's reasons for intending to make the schemes and orders, the Inspector's recommendations were accepted, but his concerns about tolling charges were not.

The applicants seek to quash the schemes and orders made pursuant to the Secretary of State's decision on three grounds. First, it is said that the Secretary of State took into account an irrelevant consideration, namely the fact that he would be exposed to claims for compensation from MEL if he did not approve the schemes and orders, and further that those claims for compensation were based on terms in the Concession Agreement which unlawfully fettered his discretion. Second, it is said that the Concession Agreement was not made available either to the objectors or to the Inspector at the inquiry, contrary to the relevant Rules, and that this resulted in prejudice to the applicants. Third, it is said that the Secretary of State misdirected himself in law, and failed adequately to deal with the Inspector's concerns, as to the lack of ministerial control over tolls which could operate against the public interest.

In making the orders the Secretary of State was seeking to exercise his powers under three different acts. He sought to make schemes and orders under first, the 1980 Act, second the Acquisition of Land Act 1981 and third, the 1991 Act. Each of these Acts, for the purpose of these proceedings, makes similar provision for the publication of proposals, for making objections, the holding of and procedure at inquiries, and the power of this court to quash any scheme or order purported to have been made pursuant to these Acts. These are provided for expressly in the 1980 Act, and in the Acquisition of Land Act 1981. By Section 1(2) of the 1991 Act, the provisions of the 1980 Act are to apply to any proposals under that Act. For the purposes of these proceedings it is only necessary therefore to refer expressly to the provisions of the 1980 Act in order to set out the powers of this Court. Schedule 2 to that Act provides as follows:

"2. If a person aggrieved by a scheme or order to which this Schedule applies desires to question the validity of it, or of any provision contained in it, on the ground that it is not within the powers of this Act or on the ground that any requirement of this Act or regulations made under this Act has not been complied with in relation to the scheme or order, he may, within six weeks from the date on which the notice required by paragraph 1 above is first published, make an application for the purpose to the High Court.

3. On any such application, the Court:

(b) If satisfied that the scheme or order, or any provision contained in it is not within the powers of this Act or that the interests of the applicant have been substantially prejudiced by a failure to comply with any such requirement as aforesaid, may quash the scheme or order or any provision contained in it, either generally or in so far as it affects any property of the applicant.

4. Subject to paragraph 3 above, a scheme or order to which this Schedule applies shall not either before or after it has been made or confirmed, be questioned in any legal proceedings whatever and shall become operative on the date on which the notice required by paragraph 1 above is first published, or on such a later date, if any, as may be specified in the scheme or order."

It is trite law, and is accepted by all parties to these proceedings, that the principles on which the Court should act are set out in the judgement of Lord Denning MR in Ashbridge Investments Limited v Minister of Housing and Local Government [1965] 1WLR 1320 at page 1326:

"The Court can only interfere on the ground that the Minister has gone outside the powers of the Act or that any requirement of the Act has not been complied with. Under this section it seems to me that the Court can interfere with the Minister's decision if he has acted on no evidence; or if he has come to a conclusion to which on the evidence he could not reasonably come; or if he has given a wrong interpretation to the words of the statute; or if he has taken into consideration matters which he ought not to have taken into account or vice versa; or has otherwise gone wrong in law."

The first ground upon which the applicants seek to quash the schemes and orders does not arise out of anything said in the decision letter of the 23rd July 1997, which purported to set out all the reasons for the decision, but out of the contents of a letter written by the Secretary of State, John Prescott to Mike O'Brien MP, whose constituency will be affected. This letter reads as follows:

"I am writing to confirm that following the accelerated review announced by Gavin on 19 June we have decided to give the go ahead to the Birmingham Northern Relief Road. I enclose a copy of the detailed decision letter which explains the reasons for this decision and a copy of the letter allowing the planning appeals in respect of the Norton Canes motorway service area and Motorboat maintenance areas at Weeford and Coleshill.

I know that you appeared in person at the public inquiry to object to the BNRR scheme and that the decision will disappoint you. You wrote to me on the 19th May and I have seen your letter to Helene Hayman of 22nd May.

The proposal for the BNRR was unique in that it was to produce this country's first privately financed toll motorway. It opens up opportunities for more integrated road-rail freight routes and links, particularly in relation to the Hams Hall development. We have taken our decision against the background of a binding concession agreement entered into by the previous administration. If we had breached the terms of the agreement, it would have been open to the concessionaire to seek compensation, the scale of which might have been substantial. The impact of the new road was considered in depth at the public inquiry and the inspector recommended that it should go ahead. The impact would be mitigated by measures such as noise barriers, creation of new habitats and extensive tree and shrub planting. In some cases we have decided, in light of the inspector's recommendations,, to enhance the proposed noise mitigation measures…

On behalf of the applicants, Mr Howell QC submits that by reason of this letter, the Secretary of State has made it clear first that, even though it was not mentioned in the decision letter of the 23rd July 1997, one of the reasons for the decision must be taken to have been the fact that compensation would have been payable and second that he was concerned that if he had not made the order he would be in breach of contract, and that that must mean that the terms of the contract produced an unlawful fetter on the exercise of his discretion.

As to the first point, he submits that the cost of meeting any claim for compensation is an irrelevant consideration it has nothing to do with the highway merits of the proposals, nor to the justification for making any toll orders. It is no more relevant a consideration than would be the aborted costs of preparing for and holding the inquiry were he to decide not to make the schemes and orders. These likewise have no relevance to the highway issues which arise in relation to any proposals under the 1980 Act, or to any issues which arise in relation to the making of any toll order under the 1991 Act.

As to the second point, he submits that the Secretary of State cannot abrogate his public duty to make his decision on the highway and other proper merits of the proposals, and, to take such time as is necessary to carry out that public duty properly. He referred me to case of Cudgen Rutile (No 2) Property Limited v Chalk [1975] AC520. In that case the Governor and the Minister of Mines for Queensland, Australia, had granted the appellants not only the right to prospect for minerals but also the right to a grant of mining leases over any part of the subject land. The Privy Council held that neither the Governor nor the Ministry of Mines had any power to bind themselves to the grant of mining leases. By statute, such leases could only be granted after certain procedures had been followed, including the opportunity to the public to express objections. In his opinion, Lord Wilberforce said, at page 535B:

"This chain of necessary steps to be taken, of satisfaction to be achieved, of decisions to be made, of discretions to be exercised, is thus a long one and it is clear, in their Lordships opinion, that any attempt by the Minister to bind himself in advance before the occasion for taking the statutory steps, making the statutory decisions or exercising the statutory discretions arose, to grant a special mineral lease, would be completely outside the Minister's statutory power"

Mr Howell submits that the Secretary of State, in using the phrase "breached the terms of the agreement" is asserting, by implication, that the concession agreement must necessarily include a term or terms which amounted to a fetter on his discretion either by requiring him to make the schemes and orders, or to make them within a particular timescale. He submits that even the latter would be an unlawful fetter on the Secretary of State's discretion, because the Secretary of State's duty in considering whether or not to make the schemes and orders in the public interest, was to take such time as was necessary to carry out that public duty properly.

He further submitted that the letter makes it clear that avoiding substantial compensation was at least a significant factor in the Secretary of State's decision. I was referred to the decision of the Court of Appeal in Simplex G E (Holdings) Ltd and another v Secretary of State for the Environment and another [1988] 3PLR25. In that case, the Secretary of State in coming to a decision in a planning appeal stated that he had taken into account a study of the area made by the local planning authority, when in fact no such study had been made. It was argued that, nonetheless, the decision should not be quashed because there were other substantial reasons Justifying the Secretary of State's decision, and that his decision would have been the same even if he had properly understood the situation. Staughton LJ simply stated that he was not satisfied that the decision might not have been different, Purchas LJ said as follows at Page 42D:

"The error, in my judgement, is undeniably a significant factor in the decision making process carried out by the Minister. Accordingly, even if it is not a dominant reason for the decision, it cannot be excluded as "insubstantial" or insignificant… It is not necessary for Mr Barnes to show that the Minister would, or even probably would, have come to a different conclusion. He has to exclude only the contrary contention, namely that the Minister necessarily would still have made the same decision"

It is submitted that on a proper analysis of the letter of the 28th July 1997, it is abundantly clear that avoiding the payment of compensation must have been a not insignificant factor in the Secretary of State's decision; in the light of clearly expressed reasons it is not open to the Secretary of State to seek to suggest otherwise.

Neither the Secretary of State nor MEL sought to argue that avoiding the payment of compensation played no part whatsoever in the Secretary of State's decision. Both argued that, properly understood, it was an insignificant factor, merely a consequential benefit, one which the Secretary of State was perfectly entitled to have in mind, although it played no significant part in the making of the decision itself. Further, it is said, the payment of compensation is envisaged in the 1991 Act. To take into account that which is expressly provided for by statute, it is therefore said, cannot amount to an unlawful fetter on ministerial discretion. The provision in question Section 1 (4) of the 1991 Act which provides as follows:

"A concession agreement relating to the design and construction of a special road shall provide that if the special road scheme authorising the provision of the road is not made or confirmed, or if the highway authority decide not to proceed with the proposed road, the authority shall pay to the concession as such compensation in respect of costs incurred by him as may be determined in accordance with the agreement."

It is further said that any such agreement would, of necessity contain some clause either expressly or by implication requiring the Secretary of State to come to a conclusion as to whether or not to make the schemes and orders proposed; and it is clear from the material before the court that this was indeed the position. This material consists firstly of a letter from Mr Poole on behalf of the Secretary of State, which also provides material against which to evaluate the significance of the statements in the Secretary of State's letter of the 28th July 1997. The relevant parts of Mr Poole's letter are as follows:

"On taking office last May Ministers had to reach decisions urgently on 12 trunk road cases. We call this exercise Accelerated Review. An explanation of the decisions taken at the time of the Accelerated Review is set out in the Departments Press Notice 176/Transport of 28 July. The reasons why urgent decisions were needed varied from case to case. You refer to the Birmingham Northern Relief Road. In that particular case, the Secretary of State had an obligation under the concession agreement to reach a decision on the inspector's report within 6 months of it's receipt. This was not an exceptional target and the BNRR concessionaire had borne substantial costs in taking the scheme through public inquiry ......

In the case of' BNRR, the Secretary of State had to decide whether or not he should set aside the inspector's report and abandon the scheme. On that point he decided that the BNRR and in particular Midland Expressways Limited (MEL) scheme that the government had inherited should be given a high priority bearing in mind the strategic importance of the route in the national transport infrastructure and the need to address the very serious problem of congestion on the M6 in the West Midlands. In deciding whether to make the Orders put to the public inquiry, the Secretary of State accepted a very positive recommendation from the inspector that it should..."

Further, in an affidavit sworn on behalf of the Secretary of State by Charlotte Mary Dixon, she said, after citing the provisions of Section 1(4), which I have set out above:

"9 - 6 months is the normal administrative target which the department seeks to meet in issuing decisions on inspectors reports. The concession agreement includes a provision under which the concessionaire may in certain circumstances be entitled to terminate the agreement where the Secretary of State has not reached a decision on the inspector's report within 6 months of it's receipt, following the first and any subsequent inquiry. However, the agreement also provides, that, had he needed to do so, the Secretary of State could have notified the concessionaire that he had decided to re-open the public inquiry. The timescale indicated therefore placed no fetters on his discretion. The Secretary of State was in fact able to reach his decision within less than 5 months of receipt of the report.

11. The Secretary of State's decision to proceed with the new motorway was taken against the background of the concession agreement under which, if he had breached the terms of the agreement it would have been open to the concessionaire to seek compensation, the scale of which might have been substantial: see the Secretary of State's letter 28 July to Mike O'Brien MP. The possibility that such compensation might be claimed was a proper factor to take into account within the scheme of the 1991 Act. Section 1(4) of the Act specifically envisages that the payment of compensation will be the consequence of the concession agreement not being proceeded with. However whilst the payment of compensation was a proper consideration for the Secretary of State to take into account, I should emphasise that it was a very subsidiary matter which stood alongside the overall strategic transport considerations in favour of the scheme. The strategic transport considerations are set out in detail in the decision letter. Secretary of State considers that those considerations fully justify the decision quite apart from the considerations of compensation."

It is submitted that I should not subject the correspondence in question to legal textual analysis, as if it was statute. On a fair reading of all the material, it is said, it is abundantly clear that the reasons for the decision were set out in the decision letter accepting as it did the Inspector's main recommendations. Looked at in that way, the passage about which the complaint was made does not support the conclusion that consideration of the question of compensation played any significant part in the decision making process.

In my judgement, the letter of the 28th July 1997, on its face, sets out in the first paragraph the reasons for the decision namely the reasons set out in the detailed decision letter. The third paragraph of that letter seems to me to have been written with a view to pointing out to the Member of Parliament who had objected to the proposals what the incidental benefit would be. The Secretary of State has not sought to deny that the fact that he would avoid compensation was in his mind. Indeed, he has in effect, through the affidavit for Charlotte Dixon asserted that it was. I do not, however, consider that it was a material consideration in the context of all the issues dealt with in the decision letter itself. In particular, the material before me satisfies me that the decision would have been the same even if he had excluded the issue of compensation from his mind. In these, circumstances, it is not strictly necessary for me to determine whether or not the question of compensation was a relevant consideration, nor whether or not the evidence suggests that the Secretary of State's discretion was unlawfully fettered by the terms of the concession agreement. However, I think that it is right that I express my views on both these matters.

As to the first, I confess that I do not understand how the question of compensation could be relevant to the highway and other public policy considerations under the 1980 Act, nor to the merits of the proposals to make a tolling order under the 1991 Act. In my judgement the applicants are correct in their submission that the question of compensation is no more relevant to these considerations than would be the fact that, in the more normal highway proposals, a decision not to make the relevant schemes and orders would render all the time and expense devoted to devising, promoting and dealing with the relevant inquiries, nugatory. The fact that Section 1(4) of the 1991 Act makes provision for compensation in certain eventualities does not make the question of compensation a relevant consideration any more than does the fact the 1980 Act envisages that the highway authority will be put to enormous expense in obtaining ministerial agreement to highway proposals. Nor can I see how it can be relevant merely because, if the Secretary of State refused to make the schemes and orders either at all or timeously, this would result in a claim for compensation which would in effect be an extra cost in relation to any subsequent proposals which may be put forward to give effect to what was described as the proven need for the motorway. Quite apart from the fact that I cannot see how this consideration can be relevant to the merits of the proposals under consideration, the argument begs two questions, first whether or not any subsequent proposals will be forthcoming and second whether or not such proposals may not prove more cost effective ultimately than the ones under consideration. I do not suggest that financial considerations are in themselves irrelevant. The cost effectiveness of proposals will always form part of the debate in any highway inquiry. That has a direct relevance to the question of whether or not the highway needs has been established. But that does not mean that any cost consequence of either approving or not approving the proposals is a relevant highway consideration under the 1980 Act or toll order consideration under the 1991 Act.

I do not, however, accept the Applicants' argument that on the material before me the Secretary of State would appear to have fettered his discretion. The argument was based primarily upon the proposition that the use of the word "breach" shows that there was some positive obligation on the Secretary of State of which he is in breach which can only be construed as involving a contractual requirement either to approve the proposals, or approve them within a given period of time, both of which would, it is said, amount to a fetter on his discretion in the sense that I have already described. In the context of these statutory provision, this, completely ignores the necessary effect of Section 1(4) of the 1991 Act. It also seems to me to involve reading the letter of the 28th July too literally. The clue can be found in Charlotte Dixon's affidavit. In paragraph 9, she states that the concession agreement included a provision under which the concessionaire may in certain circumstances be entitled to terminate the agreement where the Secretary of State has not reached a decision on the Inspector's report within 6 months of its receipt. She then refers in paragraph 11 to the word "breach" in the same context as a requirement to pay compensation under a Section 1(4) provision. It is clear that she is therefore treating any claim for compensation under a Section 1(4) provision as being compensation for "breach" of the agreement. In the same way, one can see that the word "breach" has been used for the situation where the claim for compensation has been based upon the failure of the Secretary of State to make a decision within 6 months, which is clearly to be equated to a decision not to proceed. Parliament has in my judgement expressly sanctioned such a payment. It would be extraordinary if a Concession Agreement did not make some provision to determine the circumstances in which such a payment is to be triggered. It follows, that a payment triggered by a deeming provision, which is in effect what Charlotte Dixon was referring to, must equally be one which is sanctioned by the legislation.

It follows that I reject Mr Howell's first argument.

His second ground is that the Secretary of State's failure to make available the Concession Agreement at the inquiry was a breach of the relevant inquiry procedure rules, and that the Applicants have been substantially prejudiced by that breach.

I need only to refer to the Highways (Inquiries Procedure) Rules 1976 which are the relevant rules for an inquiry under the 1980 Act; these also apply to the inquiry under the 1991 Act, and are in identical terms to the rules relating to compulsory purchase. The relevant rule is Rule 5, which provides as follows:

"(3) Where the Secretary of State intends to refer to or put in evidence at the inquiry documents (Including maps and plans), his statement shall be accompanied by a list of such documents, together with a notice stating the times and place to which the document may he inspected by any statutory objectors and the Secretary of State shall afford every statutory objector a reasonable opportunity to inspect and, where practicable, to take copies of the documents."

Rule 13 provides, inter alia:

"(5) The appointed person may allow the promoting authority to alter or add to. any list of documents which accompanied such statement, so far as may be necessary for the purposes of determining the questions in issue between the parties, but shall (if necessary by adjourning the inquiry) give every statutory objector an adequate opportunity to consider any such alterations or additions and may make in his report a recommendation as to the payment of any additional costs occasioned by any such adjournment."

The Concession Agreement was considered by both the Secretary of State and MEL to be a confidential document. It was common ground that it was not made available to any of the objectors at the inquiry, nor was it made available to the Inspector. What was made available was a document called the Concession Statement. This was prepared pursuant to Schedule 2 to the 1991 Act, and the Concession Statement (Prescribed Information) Regulations 1993 made under the 1991 Act. Paragraph 1(3) of Schedule 2 to the 1991 Act provides:

"Where the special road to which the toll order relates is to be subject to a concession, the Secretary of State or the local highway authority shall make available for inspection with a copy of the draft order or of the order, as the case may be, the statement containing such information as can be prescribed with respect to the concessionaire and the concession agreement..."

The regulations make provision for the information which has to be contained in such a statement.

Mr Howell submits that the word "refer" ill Rule 5(3) simply means "allude". In his submission, the mere intention to mention the concession agreement would therefore require the Secretary of State to make the agreement available. The Court of Appeal in the Dubai Bank Ltd v Galadari [1990] 1WLR731 held that the phrase "reference is made" in Order 24 Rule 10(1) of the Rules of the Supreme Court meant the making of a direct allusion to a document. He submitted that the documents before me make it clear that the Secretary of State undoubtedly did refer to the Concession Agreement in this sense, indeed he was effectively bound to as it was a fundamental document in the history of the proposals. In particular, he submitted that the Secretary of State referred to the Concession Agreement on a significant number of occasions in the Statement of Reasons for the proposals which he was required to provide under the Rules. He submits that it was not merely mentioned as part of the history but that in paragraph 5.32 the Secretary of State asserted that any future proposals for tolling other parts of the motorway network would not "affect the terms" in the Concession Agreement. In other words, he submits, it was being referred to not merely as a matter of history but also for its substance.

He further submits that, whatever may have been the position at the commencement of the inquiry, the Concession Agreement should have been made available under Rule 13(5) because evidence was given at the inquiry as to the role of the concessionaire under the Concession Agreement, as can be seen from page 25 of the Inspectors Report. Further, at page 191 of the Report, the Inspector relates a Response on the Secretary of State part of the following terms:

"6.4.1.5.4 If, nevertheless the toll revenues were to prove inadequate, the risk would lie with MEL and not with the government. Under the concession agreement, the project could be re-structured with a new concessionaire acceptable to the government but in the last resort the concession would lapse and BNRR would revert to the government free of charge."

And again at page 193, the Inspector records a further response from the Secretary of State:

"6.4.1.6.9. The freedom of the Concessionaire from external control over maximum tolls was a matter of statute, as passed by parliament. This freedom applied also to the relationship between the different tolls for the various classes of traffic. That said, it was accepted that there was a mechanism for the confidential Concession Agreement between the Secretary of State and MEL to be varied in order to accommodate the findings of these inquiries."

The Inspector had this to say about the fact that the Concession Agreement was not made available, at page 412:

"10.4.1.8. In this connection, I would observe that the terms of the Concession Agreement between the Government and MEL have not been fully revealed, either to me or to the public, on grounds of commercial confidentiality. In so far as these have a bearing on the acceptability of the project as a whole, I consider this to be unsatisfactory, since it is unlikely to have inspired confidence in all those who attended the inquiries that all relevant factors were properly revealed and discussed."

Mr Howell submits that there was therefore a clear breach of the requirements of the rules, and that his clients have been substantially prejudiced. In this connection, he asserts that it was made clear by his clients, and indeed other objectors, that they wished to have an opportunity to see the Concession Agreement, and that although they cannot point to any specific prejudice they have still not seen the document so as to be able to determine whether there is material within it which could have affected any of the issues dealt with by the Inspector. He relied on the well known passage from the judgement of Browne J in Hibernian Property Company Ltd v Secretary of State for the Environment (1974) 27PCR197 at page 217:

"In general, it seems to me that an applicant must prove that his interests have in fact been substantially prejudiced by the failure to comply with the particular requirement in question... This of course does not mean that the applicant must prove that the decision would have been different if the requirement had been dealt with which would be quite impossible. In my view the loss of a chance had been better off in relation to the proposed order would usually be enough to constitute substantial prejudice."

Lord Denning MR in Performance Cars Limited v Secretary of State for the Environment (1977) 34PC"2 said at page 97:

"He would not feel that Justice had been done. It is that feeling, I think, which in all our proceedings we should try to avoid. People should not go away from any inquiry feeling: I've not had a fair deal."

In that same case, Browne LJ said:

"As I have said, I have strong doubts whether the refusal of the adjournment really made any difference, but, having decided that there was in my judgement a breach of natural justice, I do not think that my doubts matter."

In the present case, Mr Howell submits that is quite clear that by reason of the failure of the Secretary of State to make available the Concession Agreement there was potential unfairness and the clear feeling, expressed by the Inspector, that the Inquiry had not been able to explore satisfactorily matters which might well have been relevant to the proposals

Both Respondents submitted that the rules, properly construed, only required the Secretary of State to make the Concession Agreement available insofar as, in the instance, lie intended to rely on it or make use of any of its terms at the inquiry, and during the inquiry only so far, again as he relied on it or made use of it, or its terms. The Statement of Reasons made it plain that the Secretary of State considered that the Concession Agreement was confidential and that he was therefore not intending to make use of it. All relevant information was contained in the Concession Statement which was provided for the objectors and the Inspector. It is submitted that the only material which was relied on or used in this sense was material contained in the Concession Statement. Further, it is said that, in any event. it is now too late to complain that the Concession Agreement was not made available. In her affidavit Charlotte Dixon states that at the Inquiry no submission was made to the Inspector that Rule 5(3) applied in relation to the Concession Agreement nor was any request made to the Inspector for the production of the Concession Agreement based on that rule. It is said that the appropriate time to take any objection would have been at the commencement of the inquiry, or at any later stage when the Secretary of State is alleged to have sought to rely on it terms without making it available.

In my judgement, I can gain little assistance from the Dubai Bank case. The word "reference" was there used in a very different context, and had to be construed in the light of the purpose of the particular rules in question, namely the rules of discovery in civil proceedings where there is an obligation to disclose all relevant material. The scheme of the rules in the present case makes it clear that the Secretary of State in effect determines the ambit of the relevant documentation for the purposes of Rule 5(3). He is only required to disclose those documents which he "intends to refer to". This suggests, to me, that a mere passing allusion to a document is not what is covered by the rule. I consider that the rule is intended to cover those documents which the Secretary of State intends to rely on or make use of, as part of his case so that the word "refer" means "have recourse to".

It is clear that the Secretary of State was expressly eschewing recourse to the Concession Agreement, as opposed to the Concession Statement at the commencement of the inquiry. It follows that there was no breach, in my judgement, of Rule 5(3). However, it seems to me difficult to escape the conclusion that in paragraphs 6.4.1.5.4 and 6.4.1.6.9 (supra) the Inspector was recording the fact that the Secretary of State had had recourse to the terms of the Concession Agreement, at least in those limited respects. As to the first, it amounts to an assertion as to the risk carried by MEL under the terms of the Concession Agreement; as to the second it suggests that the Concession Agreement might contain a mechanism for variation to accommodate the findings of the inquiry. My concern is the extent to which it could properly be said that this breach of Rule 13(5), namely that the Inspector should not have permitted these responses to have been made in the absence of disclosure of the Concession Agreement, has resulted, in these two respects in any substantial prejudice to these applicants. There is no more in the papers before me than a bare assertion of prejudice. I accept entirely that the Court should not impose an impossible burden on objectors by requiring them identify prejudice with particularity, especially where the complaint is the absence of a document as a result of which the objectors could say that they had no means of knowing whether anything in the document might or might not have been material in the particular circumstances. However, where the breach of the requirement relates to specific responses to specific issues, it does seem to me that the Court should be provided with some material to indicate what prejudice might have been suffered. And there is no such material before me in the present case. For these reasons I reject Mr Howell's second ground.

I cannot help feeling however that the Secretary of State has made a rod for his own back in claiming blanket confidentiality in relation to the Concession Agreement and therefore not making it (or at least extracts from it) part of his case. This resulted in understandable unease on the part of the Inspector, and has given ammunition to the objectors. In the interests of good administration, it seems to me that it would have been preferable if this debate had been resolved at the outset of the Inquiry. The mechanism exists. If the objectors considered that they were substantially prejudiced by the Secretary of State's refusal to make the Concession Agreement available, if necessary, redacted, an application could have been made for mandamus. This would have enabled this Court to deal with the issues at a stage which would not have imperilled the whole Inquiry process. I do not consider that the fact that there is a statutory appeal procedure is more than a discretionary bar to such an application. In appropriate, if rare cases, I consider that this Court should be prepared to entertain such an application if to do so could prevent an unnecessary waste of time and resources.

The third ground relates to way in which the Secretary of State treated the Inspector's concerns about the possibility of differential tolls being used to price certain categories of vehicle off the road. The inspector expressed his concerns in his report at page 412 as follows:

10.4.1.9 The possibility, at some later date, of the deliberate pricing off of heavy vehicles - or perhaps in different future circumstances, of some other class of vehicles considered by the concessionaire to be less profitable overall than the average - appears to me to be a major defect in the lack of public control over the tolls...

10.4.1.10 I consider that at this time it is impossible to say, with any certainty, whether or not such a situation would in fact occur, but it seems to me that there is a substantial if unquantifiable possibility that it could. If the result were to be that any class of traffic, and especially heavy goods vehicles, would differentially be priced off the road in the interests of maximising profit, then in my view this would be contrary to the objectives of the BNRR project and therefore contrary to the public interest. Furthermore, this situation could arise when at least half the life of the concession remained. In my view it would be undesirable in principle, and potentially harmful to the rest of the highway system for any such discrimination between classes of traffic to be allowed to occur unless this was to be based on a public policy applied to the highway system as a whole. This would apply equally whether such discrimination was uniform throughout the day or applied differently to parts of it ...

My conclusion is that it is reasonable for me to proceed on the basis that such control might be possible, either by compulsion or through agreement. On that basis, I recommend that the Secretary of State should take such steps as they may consider appropriate to satisfy themselves that selective pricing off of individual classes of vehicle for commercial reasons will not happen in the case of BNRR...

10.10.1(e) In the longer term, with increasing general congestion on the road system I am concerned about an apparent lack of ministerial control over the relationship between the tolls charged at different times of the day or for different classes of traffic. I consider that this could allow the operators' financial interests to cause the operation of the tolling to act against some aspects of the objectives of the road and against the public interest. The degree of the probability of this, however depends upon too many variables for it to be quantifiable at this time and it is a matter upon which I am confident the ministers will satisfy themselves. I have therefore concluded that the Tolling Order should be made."

The Secretary of State dealt with the matter in the decision letter as follows:

"61. The Inspector felt that there was a substantial, if' unquantifiable, risk that, for commercial reasons, MEL may seek, to set high toll levels deliberately to discourage certain classes of. traffic, in particular heavy goods vehicles (HGVs) from using the BNRR. If pricing off did occur then it would be, contrary to the public interest. As recorded at paragraph 14(j) above he went on to recommend that the Secretary of State should satisfy himself that selective pricing off of individual classes of vehicles for commercial reasons will not happen in the case of BNRR. The Secretary of State agrees with the Inspector that any attempt to price off HGVs or any other class of traffic would be potentially harmful to the rest of the highway network. He has therefore considered this matter very carefully. In doing so he has particularly noted that the risk of pricing off of HGVs was not a concern expressed on behalf of road haulage interests groups. He further notes that under the Concession Agreement MEL must comply with all applicable English and European Community legislation. EC Directive 93/89 on tolls and charges on goods vehicles over 12 tonnes provides that "toll rates shall be related to the costs of constructing, operating and developing the infrastructure network concerned."

62. MEL propose to operate the BNRR as a premium congestion free route. At the inquiries road haulage interests who supported the construction of the BNRR confirmed that delays on the M6 seriously affected the operations of the companies which they represented. Freight Transport Association cited examples of some of their member companies having to operate more vehicles at considerable commercial and environmental cost in order to maintain customer service levels for optimum use to be made of a driver's maximum permitted driving hours in any one day. The Association estimated that the hourly operating cost of a 38 tonne articulated lorry was £30. Given these facts it seems to the Secretary of State that cost conscious road hauliers are among those most likely to see a considerable benefit in paying a toll to ensure a congestion free journey through the West Midlands. Therefore, because they are likely to represent a very significant element of potential toll revenue the Secretary of States believes that it is extremely unlikely that MEL would wish to pursue a deliberate commercial policy of pricing-off HGVS. Furthermore, the Secretary of State considers that to optimise the revenue potential of the BNRR, it will be in MELs commercial interest to ensure that carriageways are designed to have a long life with provision for strengthening to maintain the roads in a safe and serviceable condition, as they are required to do throughout the concession period. Pricing off HGVs in the latter part of that period in the expectation that it would prolong the life of the road beyond the end of the concession period would carry considerable commercial risk for MEL as the likelihood of failure of the carriageway at a particular time is not predictable with certainty. The costs to MEL of pursuing such a strategy could be high.

63. BNRR is being promoted as a privately financed scheme under the provisions of part 1 of the New Roads and Street Works Act 1991 (the 1991 Act). Section 8 of the 1991 Act empowers the Secretary of State to specify in a toll order maximum tolls which may be charged by a concessionaire only in cases where the road to which the order relates consists of or includes, a major crossing to which there is no reasonably convenient alternative. The BNRR does not include such a crossing. The Secretary of State may not therefore set a maximum toll charge for traffic using the BNRR. However, it was submitted to the Inquiries that to prevent pricing off of particular classes of traffic, the Secretary of State could specify in a toll order that all classes of traffic be charged the same toll as that for cars or that an order could specify a relationship between the tolls levels for different classes of traffic. Differential tolling for classes of traffic is normal practice for tolled road facilities in England. The Secretary of State is satisfied that it would be contrary to Section 8 of the 1991 Act to provide in a toll order that all classes of traffic using the BNRR be charged the same toll since this would in effect set the maximum amount which could be charged and interfere with the commercial judgement of MEL about the toll to be charged for each particular class of traffic. Specifying a proportionate relationship between toll charges for particular classes of traffic was similarly contrary to Section 8 of the 1991 Act since in setting a toll for one set of traffic the maximum tolls for other classes would be automatically determined and MEL would again be denied the freedom to make a commercial judgement as to the appropriate toll for each particular class of traffic.

64. The Secretary of State will remain the highway authority for the BNRR throughout the concession period and will monitor MEL's compliance with the Concession Agreement, whose terms may be amended through mutual agreement by the Secretary of State and MEL. Given the view of the Secretary of State that pricing off by MEL is extremely unlikely for the reasons given at paragraph 62 above he sees no need to seek to amend the Concession Agreement in this respect. As a matter of policy, the Secretary of State is content that MEL should be free to exercise their own commercial judgement in setting toll levels for particular classes of traffic using the BNRR."

Section 8(1) of the 1991 Act provides:

"A toll order authorising the charging of tolls by a concessionaire shall specify the maximum tolls which may be charged, if and only if, the road to which the order relates consists of or includes a major crossing to which there is no reasonable alternative."

Mr Howell's submission is that the Secretary of State has quite simply misinterpreted Section 8, and has failed to deal with the fact that the Inspector's concerns were not simply related to HGVs, but to the possibly pricing off of other categories of traffic. As a matter of construction, he submits that the reference "maximum tolls" can only sensibly refer to identifiable sums. He argues that this clear from the provisions of section 8(5), which provides:

"The order may specify different maxima for different descriptions of traffic (which need not correspond with the classes of traffic prescribed by the special road scheme) and may provide for the amounts to be varied in accordance with a formula specified in the order."

The reference to "amount" can only sensibly mean a given sum of money, to which a formula may be applied to achieve appropriate variations. The Inspector's suggestion as to proportionate tolls, that is restricting the proportion by which the toll for one class of vehicles may exceed that for others, is not therefore a "maximum toll" for the purpose of the Section. As to the second point he says that the only arguments put forward by the Secretary of State for declining as a matter of policy to consider a proportionate restriction on the tolls related to HGVs, whereas the Inspector's reasons for concern clearly included the possibility of other classes of vehicles being affected.

The Respondents' arguments are that first, he has not misconstrued the Section, second it was only in relation to HGVs that any reasoned argument was directed to the Inspector, and in those circumstances. the Secretary of State was not required to deal with in detail with arguments which were not in fact addressed at the inquiry, third, and in any event, the Secretary of State made it clear that his policy was that MEL would be free to exercise their- own commercial judgement in setting toll levels for particular classes of traffic.

It is clear that the purpose of Section 8 is to express a general policy that there should be no restrictions by way of maximum tolls save where the concessionaire holds a monopoly position which could be abused. The Section sets out the only circumstances in which maximum tolls can be provided for in the case of a concessionaire. In these circumstances, it seems to me that the Secretary of State is not empowered to impose in any other toll order any provision which could be described sensibly as imposing a maximum toll". Restrictions such as those envisaged by the Inspector would, in effect, provide that the maximum amount payable by way of toll for any particular class of vehicles would be prescribed by its proportionate relationship with the toll for another class of vehicle. For example, a condition that HGVs should not be charged more than four times the amount charged for private motor vehicles would mean that the maximum amount which could be charged for HGVs would be four times the amount charged for private motor vehicles. This seems to me to be a perfectly sensible use of language, so as to mean that any such provision would be outside the powers of the Secretary of State. In my view, therefore, the Secretary of State did not misdirect himself in relation to the meaning of Section 8(1) of the 1991 Act.

A fair reading of the Inspector's report makes it clear that whilst he undoubtedly does refer to other classes of vehicles other than HGVs, all the argument had been centred upon the problem presented by the possible pricing off of HGVs. The Inspector's reasoning was directed to HGVs. In these circumstances it is not surprising that the Secretary of State's refutation is directed to HGVs. In any event, it seems to me to be clear, as the respondents have submitted, that at the end of the day the Secretary of State as a matter of policy was not prepared to impose such a restriction. The concessionaire was to be entitled to set his charges at whatever level he considered the market could bear. That is a perfectly lawful policy which the Secretary of State was entitled to adopt.

For all these reasons, I therefore dismiss this motion.