In this edition of our quarterly case update, we offer a straightforward and concise overview of six public law and regulation cases from the first quarter of 2026, highlighting the key principles, procedural developments and practical lessons for public bodies, regulators and regulated organisations.

Gowling WLG's team of public law and regulation specialists examine the following cases and identify the key points which can be taken from them. This edition contains some interesting cases on price control appeals, procedural fairness and statutory interpretation of regulatory powers:

The CMA's standard of review in energy price control appeals

In the case of R (Wales & West Utilities Limited) v Competition and Markets Authority, the claimant gas distribution network operator (WWU), challenged the Competition and Market's Authority (CMA)'s determination of WWU's appeal against the Gas and Electricity Markets Authority (GEMA)'s RIIO-2 price control decision.

When considering a statutory appeal to a price control decision under the Gas Act 1986 (the Act), the CMA must consider whether GEMA's decision is wrong on one of a number of statutory grounds, including whether GEMA did not have regard to, or did not give appropriate weight to, its principle objective and duties under the Act. The CMA must have regard to those provisions to the same extent as GEMA when determining an appeal.

Under section 4AA(2)(b) the financing duty requires GEMA to have regard to the need to ensure that gas distribution networks can finance the activities required of them by legislation and GEMA's licence conditions.

WWU contended, among other things, that the CMA had erred as to:

  1. the appropriate standard of review, and
  2. its application of the financing duty by failing to consider the financial circumstances of individual licence holders, and
  3. its upholding of GEMA's approach to cost of debt.

The High Court provided important guidance on how GEMA must approach its statutory duties and the scope of the CMA's appellate function.

In terms of the standard of review, WWU contended that the CMA's approach to determining whether GEMA's decision was 'wrong' on the statutory grounds required a more intensive form of review than a traditional judicial review, arguing that the CMA was required to reach its own judgment as to what constitutes "proper" regard or "appropriate" weight in relation to GEMA's statutory duties.

An appeal should not involve a full rehearing, and it is not for the CMA to remake the decision. However, the Court confirmed that the CMA's review is more intensive than traditional judicial review.

In particular, the Court held that the CMA was wrong to require that any alternative approach put forward by an appellant must be 'clearly superior' to GEMA's approach before the CMA found the latter to be wrong in relation to GEMA's statutory duties.

Instead, the proper test is whether that alternative approach is 'materially better'. Such an assessment involves the CMA weighing up the pros and cons and concluding whether the alternative offers something more than GEMA's approach.

On the construction of the financing duty, the Court held that the CMA had misdirected itself in concluding that there was no requirement to have regard to the circumstances of and the impact of the decision upon each individual licence holder.

However, the Court found that, in this case, GEMA and the CMA had taken WWU's individual circumstances into account (including by making adjustments for the company's size) and therefore refused to grant relief under section 31(2A) of the Senior Courts Act 1981 on the basis that the CMA's misdirection did not make a difference the decision outcome.

Procedural fairness and policy considerations in proscription decisions

In R (Ammori) v Secretary of State for the Home Department, the Divisional Court considered a challenge to the Secretary of State's (SoS) decision to proscribe Palestine Action under the Terrorism Act 2000 (the Act)[1].

Under Section 3 of the Act, the SoS may proscribe an organisation she believes is "concerned in terrorism". Section 1 defines 'terrorism' as the "use or threat of action" which is "designed to influence the government…or to intimidate the public or a section of the public" and "made for the purpose of advancing a political, religious, racial or ideological cause", involving serious violence against a person and/or serious damage to property.

The proscription decision followed an incident in which three activists broke into an airbase and damaged two military planes with spray paint.

The claimant, a co-founder of Palestine Action, raised four grounds of challenge – lack of procedural fairness, failure to consider relevant considerations, breach of policy, and unjustified interference with rights under the European Convention of Human Rights (the ECHR).

The claim failed on two grounds:

  1. On procedural fairness, the claimant submitted that the SoS was required to consult Palestine Action before proscribing, relying on Bank Mellat v HM Treasury (No.2). The Court disagreed, distinguishing Bank Mellat on the basis of the national security context in this case. The Court also questioned how the consultation would practically work given the varied shapes, sizes and locations of relevant organisations.
  2. The court rejected the relevant considerations ground, observing that it lacked "substance" and largely repeated the human rights and policy arguments.

The claim succeeded on the remaining two grounds:

  1. The SoS's policy stated that the SoS may proscribe an organisation 'concerned in terrorism' where it is "proportionate to do so". The Court rejected that this entailed a proportionality exercise as set out in Bank Mellat. Rather, the SoS was required to appreciate the likely consequences of proscription; understand the nature and significance of Palestine Action by reference to the five factors stated in the policy and/or other relevant actions; and then assess the need for proscription.

    The Court held that while the SoS was entitled to attach significant weight to the nature and scale of Palestine Action's activities and the threat posed in the UK, her approach to 'other factors' was inconsistent with the policy's purpose of limiting the discretionary power to proscribe. In particular, the SoS relied heavily on the operational consequences and enforcement advantages of proscription – considerations which would (absent exceptional circumstances) apply equally to any organisation that could be proscribed.

  2. The ECHR rights ground succeeded as a consequence of the SoS's failure to properly apply her own policy. Her interference with Articles 10 (freedom of speech) and Article 11 (freedom of association and peaceful assembly) was not 'prescribed by law'. The Court further held that proscription was, in any event, disproportionate as Palestine Action's activities had "not yet reached the level, scale and persistence" justifying significant interference with Convention rights.

The Court accordingly proposed to quash the decision to proscribe Palestine Action.

Implied power to correct administrative errors in immigration decisions

In YC v Secretary of State for the Home Department, the Court of Appeal considered whether the SoS has an implied power, incidental to her statutory powers, to withdraw, cancel, vary and/or correct a grant of indefinite leave to remain (ILR) where they erroneously issued a letter granting ILR in place of a grant of limited leave to remain (LLR) as intended.

It was held that the SoS does have such a power.

The appellant had applied for asylum. On 13 November 2023, the Home Office issued a decision letter stating that he had been granted ILR on the basis of private life under Article 8 ECHR. However, the appellant's legal representatives subsequently received the appellant's biometric residence permit referring to the appellant's 'leave to remain' as opposed to ILR.

Upon notifying the Home Office of the inconsistency, the appellant was advised that the wrong letter template had been used and was issued with a replacement letter reflecting the grant of LLR on private life grounds.

The appellant challenged the replacement letter on the basis that, although the decision had been mistaken, the first letter was a legally effective grant of ILR and that the SoS had no statutory power to revoke it.

The SoS contended that she possessed an implied or incidental power under the Immigration Act 1971 to correct an obvious clerical error. 

The Court of Appeal dismissed the appeal, agreeing with the SoS. The Court observed that:

  • The grant of ILR was an error that should have been immediately apparent to the appellant, given that he had neither applied for nor met the requirements for ILR and so should not have reasonably expected to receive the grant decision;
  • The SoS had a well-established implied power to withdraw immigration decisions adverse to an applicant – there was no reason in principle why the existence of an implied power should be any different for favourable decisions;
  • There is a clear public interest in ensuring that leave is granted only where the statutory and rules-based criteria are satisfied;
  • The absence of express statutory provision does not preclude the power's existence – the power is incidental to, rather than an extension of, the statutory scheme; and
  • Common sense should prevail in that an obvious administrative error should not be perpetuated merely because it was favourable.

Notwithstanding the above, the Court emphasised that the withdrawal of a favourable decision which has been communicated as a result of an obvious administrative mistake must be "promptly identified and acted upon". In this case, the correction was issued approximately six weeks after the first letter, and around two weeks after the error had been brought to her attention.

The Court further emphasised this implied power must be exercised "sparingly", within established public law safeguards, and on a case-by-case basis. The withdrawal of such a decision must not infringe ECHR rights, and must not be irrational or unfair, and is subject to close judicial scrutiny.

Statutory interpretation of broad regulatory powers in complex schemes

In Mastercard Europe SA (& Ors) v Payment Systems Regulator, the High Court considered whether the Payment Systems Regulator (PSR) had the power to use a general direction, under section 54 of the Financial Services (Banking Reform) Act 2013 (FSBRA), to impose price caps on cross-border interchange fees (IFs).

The challenge was brought after the PSR concluded that Mastercard and two other companies were not subject to effective competitive constraints and therefore decided in principle to impose price caps by general direction (although the level and implementation date had not yet been determined).

Section 54 grants the PSR a broad power to impose directions on regulated entities, including to require entities to take or refrain from taking specified action. Directions can be imposed generally (i.e. on all regulated entities) or on specified entities. In this case, the general directions required the claimants to refrain from charging prices for IFs over a specified threshold.

There is no statutory appeal mechanism against the imposition of a general direction, with challenges being brought only through judicial review. By contrast, a direction on specific entities may be appealed to the Competition Appeal Tribunal. Likewise, other types of decision made under Part 5 of FSBRA can be the subject of a merits appeal to the CMA.

The claimants' principal argument was that, considered in light of its context and purpose, section 54 did not empower the PSR to impose price caps on IFs by means of a general direction. This was because:

  1. the wording of the section made clear that that it was only to be used in relation to 'operational' matters,
  2. where Parliament had intended to grant the PSR particularly intrusive powers, these were set out explicitly in the statute – in particular, section 57 empowered the PSR to vary fees and charges under certain agreements upon application by a party to that an agreement – and where Parliament has granted a specific power to deal with an issue, more general provisions will not apply,
  3. if the PSR considered there to be a general issue with pricing it should use its competition powers to deal with it, and
  4. intrusive powers explicitly granted by FSBRA (including the exercise of the PSR's competition powers) are balanced by a statutory appeal right, which was absent in this case.

The Court held that section 54, on its true construction, was wide enough to permit price caps and the statutory framework did not imply any limitation on this power. On the contrary, the statutory context makes clear that the legislative purpose behind the general power under section 54 is to advance the payment systems objectives (which Parliament requires PSR to advance), in particular the objectives of promoting competition and the interests of service-users.

The Court also rejected an argument that the absence of a merits appeal against general directions meant Parliament could not have intended section 54 to authorise intrusive measures, noting that intrusive public powers are often subject only to judicial review.

Procedural fairness in applying for competitive schemes

In Intelligent Land Investments Group PLC v Gas and Electricity Markets Authority, the High Court considered a judicial review challenge to Ofgem's rejection of an application for support under the Long Duration Energy Storage Cap and Floor Scheme (the Scheme) for a pumped storage hydro project. The Court held a rolled-up hearing where permission and the substantive case are considered at the same time.

The Scheme was intended to incentivise long-duration energy storage assets as part of the Government's energy transition strategies. The claimant submitted its application to the Scheme on the last day of the application window but failed to include the required financial model, which was submitted only after Ofgem had issued a 'minded to' rejection of the application.

The claimant argued that this omission was a clerical error, but Ofgem refused to accept the late submission.

The claimant sought to challenge Ofgem's refusal on the grounds of procedural unfairness as it had 'ignored' the financial model (Ground 1) and/or that it was in breach of the Tameside duty (i.e. it failed to take reasonable steps and ask itself the right questions before reaching its decision) (Ground 2).

Permission to apply for judicial review was refused. The Court held that:

  • it is common ground that the claimant did not satisfy the eligibility criteria within the relevant deadline – the issue was whether to allow the claimant to submit the financial model late,
  • Ofgem had considered why the financial model had not been submitted within the deadline, but the duty to act in a procedurally fair manner did not require Ofgem to accept the representations,
  • likewise, Ofgem had asked why the financial model was submitted late and asked for representations to explain the flaws in the application,
  • it was not irrational for Ofgem to decline to consider the contents of the financial model or the merits of the application overall in coming to a decision as to whether the financial model should be accepted late and/or the claimant should be permitted to satisfy the eligibility criteria after the deadline, and
  • ·once Ground 1 was rejected, Ground 2 fell away (as it was not irrational to fail to consider the merits of the application overall).

The Court also applied the finding in R (Gallagher Group Ltd) v Competition and Markets Authority that there is no free-standing public law principle of "conspicuous unfairness" or "substantive unfairness". There is a principle of substantive legitimate expectation which requires a clear, unambiguous and unqualified representation that the claimant will receive a substantive benefit, but the Court noted that did not arise in this case. For substantive legitimate expectation to arise, there would need to have been, at least, a representation by Ofgem that materials submitted after the deadline would be taken into account.

Adequacy of reasons and apparent bias in planning applications

In R (Perrin) v North Devon District Council, the High Court considered a challenge the defendant's planning committee (the Committee)'s grant of planning permission for the erection of an open market dwelling (the Development). The Court quashed the planning permission in light of the inadequacy of reasons relied upon and the existence of apparent bias.

Planning officers had initially recommended refusal of the application on the basis that the site was not within the built form of the settlement and that an open-market dwelling would not meet the relevant affordable housing policy requirements. However, despite some back and forth on the adequacy of reasoning, the Committee proceeded to grant permission.

The claimant, a nearby resident to the Development site, challenged the Committee's decision on a number of grounds including apparent bias.

The Court began by highlighting the distinction between allegations of pre-determination and bias. In relation to the former, it noted that local councillors are often elected on the basis that they have stated views on particular issues and this is permissible. In the absence of further evidence that the decision was taken with minds closed to the arguments against any such leanings, pre-disposition on an issue will not sustain a challenge based upon alleged pre-determination.

Where the allegation is one of pre-determination of the challenged decision, as opposed to bias on the part of one of the members of the decision-making committee, the court will wish to inquire into the state of mind of the majority who voted in favour of the relevant decision.

However, the Court clarified that the concept of apparent bias is based upon the 'appearance' of things to a fair-minded and informed observer – it is the presence of factors which give rise to a real 'danger' of bias that results in procedural unfairness. The Court held that apparent bias could arise without it being shown that such factors materially influenced the decision under challenge. In other words, in order to establish unlawfulness, it is not necessary to show that the danger did actually materialise through the effect that the bias had on the ultimate decision.

The Court held that there was a real possibility that the decision was tainted by apparent bias, on the basis that the councillor was personally familiar with one of the applicants (including, amongst other things, making complimentary remarks about the applicant's family by name in the Committee meeting and providing procedural advice to the applicant on the preparation of the permission application).

Having found that there was bias, the Court considered whether the decision should be quashed in light of that unlawfulness. It held that it should. The councillor's senior role was also material to the Court's conclusion as it was deemed his views were likely to carry some weight amongst other members of the Committee. This was not a case where the apparent bias found could be disregarded on the ground of immateriality.

These decisions demonstrate the continued importance of procedural fairness, statutory interpretation and the limits of regulatory decision-making powers. If you would like to discuss any of these cases, or how these developments may affect your organisation, please contact a member of our Public Law & Regulation team.

Footnotes:

[1] We note that the Divisional Court's decision has since been considered by the Court of Appeal in The Secretary of State for the Home Department v Huda Ammori, R (on the application of) [2026] EWCA Civ 721. We will be covering the appeal decision in the next edition of our Quarterly Case Update.