The district auditor for Poplar Council had surcharged council members for making payments of a minimum wage of andpound;4 a week to their lowest grade of workers. This was notwithstanding that the cost of living had fallen during the year from 176% to 82% above its pre-First World War level. The council was motivated by the belief that it ought to act as a model employer towards its employees. The sum was fixed not by reference to any of the factors which go to determine a scale of wages, but by reference to some other principle altogether.
Held: The surcharge was upheld. The councillors had not fixed on the sum as wages at all and had acted unreasonably. In fixing andpound;4 they had fixed it by reference to a matter which they ought not to have taken into account and to the exclusion of those elements which they ought to have taken into consideration in fixing a sum which could fairly be called a wage.
Lord Atkinson said: ‘The council would . . fail in their duty if, in administering funds which did not belong to their members alone, they put aside all these aids to the ascertainment of what was just and reasonable remuneration to give for the services rendered to them, and allowed themselves to be guided in preference by some eccentric principles of socialistic philanthropy, or by a feminist ambition to secure equality of the sexes in the matter of wages in the world of labour.’
and ‘A body charged with the administration for definite purposes of funds contributed in whole or in part by persons other than the members of that body, owes . . a duty to those latter persons to conduct that administration in a fairly businesslike manner with reasonable care, skill and caution, and a due and alert regard to the interests of those contributors who are not members of the body. Towards these latter persons the body stands somewhat in the position of trustees or managers of the property of others.’
Acts done ‘in flagrant violation’ of the duty should be held to have been done ‘contrary to law’ within the meaning of the governing statute.
Lord Sumner stated that if it was found that the councillors’ ‘evil minds had missed their mark, and the expenditure itself was right, then the expenditure itself would not be contrary to law’. He went on to say that for administrative bodies to act in good faith, they must put ‘their minds to the comprehension and their wills to the discharge of their duty.’
Lord Wrenbury said: ‘A person in whom is vested a discretion must exercise his discretion upon reasonable grounds. A discretion does not empower a man to do what he likes merely because he is minded to do so – he must in the exercise of his discretion do not what he likes but what he ought. In other words, he must, by use of his reason, ascertain and follow the course which reason directs.’
Lord Atkinson, Lord Sumner, Lord Wrenbury
 AC 578,  All ER 24
Cited – Associated Provincial Picture Houses Ltd v Wednesbury Corporation CA 10-Nov-1947
Administrative Discretion to be Used Reasonably
The applicant challenged the manner of decision making as to the conditions which had been attached to its licence to open the cinema on Sundays. It had not been allowed to admit children under 15 years of age. The statute provided no appeal . .
Applied – Hinckley and Bosworth Borough Council v Shaw QBD 2000
Two senior and long term employees of the Council proposed voluntary early redundancy. After discussions, their contracts were varied with enhanced pay so that they would also have enhanced pensions and redundancy payments. Such enhancing agreements . .
Lists of cited by and citing cases may be incomplete.
Local Government, Administrative
Updated: 13 May 2022; Ref: scu.224436