Local Government Act 1988

Section 30.

SCHEDULE 4 [1982 c. 32.] Sections to be Inserted in Part III of Local Government Finance Act 1982

Power of auditor to issue prohibition order

25A (1) The person who is for the time being the auditor in relation to the accounts of any body whose accounts are required to be audited in accordance with this Part of this Act may issue an order under this section (in this Part referred to as a “prohibition order”) if he has reason to believe that the body or any officer of the body—

(a) is about to make or has made a decision which involves or would involve the body incurring expenditure which is unlawful; or

(b) is about to take or has taken a course of action which, if pursued to its conclusion, would be unlawful and likely to cause a loss or deficiency; or

(c) is about to enter an item of account, the entry of which is unlawful;

and for the purposes of this section and section 25B below, the actions of a committee or sub-committee of the body or of any other person (not being an officer) authorised to act on behalf of the body shall be treated as the actions of the body itself.

(2) A prohibition order is one—

(a) which is addressed to the body or officer concerned;

(b) which specifies the paragraph of subsection (1) above which is relevant and the decision, course of action or item of account to which the order relates;

(c) which specifies the date on which (subject to subsection (5) below) the order is to take effect, being a date not earlier than the date of service of a copy of the order in accordance with paragraph (a) or, as the case may be, paragraphs (a) and (b) of subsection (4) below; and

(d) which requires the body or officer concerned to desist from making or implementing the decision, taking or continuing to take the course of action or, as the case may be, entering the item of account in question.

(3) Where two or more auditors are appointed in relation to the accounts of any body, the power to issue a prohibition order may be exercised by the auditors acting jointly or by such one of them as they may determine; and, in relation to such an order, any reference in subsections (4) and (5) below to the auditor is a reference to the auditor or auditors by whom the order is issued.

(4) A copy of a prohibition order—

(a) shall be served on the body to which, or to an officer of which, it is addressed; and

(b) in the case of an order addressed to an officer, shall also be served on him; and

(c) may be served on such other person or persons as appears to the auditor to be appropriate.

(5) A prohibition order shall not have effect unless, not later than the end of the period of seven days beginning on the date of service referred to in subsection (2)(c) above, the auditor serves on the body concerned and on any officer on whom a copy of the order was served under subsection(4)(b) above, a statement of the auditor’s reasons for the belief referred to in subsection (1) above.

(6) Any copy of an order or statement which under this section is to be served on an officer of a body shall be served on him by addressing it to him and by delivering it to him or leaving it at, or sending it by post, to the office at which he is employed.

(7) A prohibition order may at any time be revoked (but not varied) by the person who is for the time being the auditor in relation to the accounts of the body to which or to an officer of which the order was addressed.

Effect of and appeals against prohibition orders

25B (1) So long as a prohibition order has effect, it shall not be lawful for the body concerned or any officer of that body to make or implement the decision, to take or continue to take the course of action or, as the case may be, to enter the item of account to which the order relates.

(2) A prohibition order—

(a) takes effect, subject to subsection (5) of section 25A above, on the date specified in the order in accordance with subsection (2)(c) of that section; and

(b) continues to have effect, subject to any order or decision of the High Court on an appeal under subsection (3) below, until revoked under section 25A(7) above.

(3) Not later than twenty-eight days after the service under section 25A(5) above of a statement of reasons relating to a prohibition order, the body concerned (but not any officer of that body) may appeal against the order to the High Court in accordance with rules of court.

(4) On an appeal against a prohibition order under subsection (3) above, the High Court may make such order as it thinks fit for the payment by the body concerned of expenses incurred by the auditor in connection with the appeal.

(5) Any expenses reasonably incurred by the auditor in or in connection with the issue of a prohibition order shall be recoverable by him from the body concerned.

(6) In this section “the body concerned”, in relation to a prohibition order, means the body to which, or to an officer of which, the order is addressed.

Supplementary provisions as to prohibition orders

25C (1) In any case where—

(a) before a prohibition order is issued, a body enters into a contract to dispose of or acquire an interest in land, and

(b) before the disposal or acquisition is completed, a prohibition order takes effect as a result of which it is unlawful for the body to complete the disposal or acquisition,

the existence of the prohibition order shall not prejudice any remedy in damages which may be available to any person by reason of the body’s failure to complete the contract.

(2) No action shall lie against an auditor in respect of any loss or damage alleged to have been caused by reason of the issue of a prohibition order which was issued in good faith; but nothing in this subsection affects the right of a court to award costs against an auditor on an appeal under section 25B(3) above.

Power of auditor to apply for judicial review

25D (1) Subject to section 31(3) of the Supreme Court Act 1981 (no application for judicial review without leave) the auditor appointed in relation to the accounts of a body may make an application for judicial review with respect to—

(a) any decision of that body, or

(b) any failure by that body to act,

which (in either case) it is reasonable to believe would have an effect on the accounts of that body.

(2) The existence of the powers conferred on an auditor under this Part of this Act shall not be regarded as a ground for refusing an application falling within subsection (1) above (or an application for leave to make such an application).

(3) On an application for judicial review made as mentioned in subsection (1) above, the court may make such order as it thinks fit for the payment by the body to whose decision the application relates of expenses incurred by the auditor in connection with the application.